Earlier today the NFIB released its monthly reading on small business sentiment. Small business sentiment hit its highest level since 1983 in July.

In addition to its main sentiment indicator, NFIB also asks survey takers what their number one problem is as a small business owner. Below is a chart showing the results from this question going back to early 2007. We’ve smoothed out the chart by showing the rolling 3-month average.

As shown, Quality of Labor has shot up to the number one problem spot in recent months, over-taking Taxes, and Government Red Tape, which have both been drifting lower for the last couple of years. After these three problems, the next biggest are Cost of Insurance, Competition, Other, Poor Sales, and Cost of Labor.

While inflation and interest rates have definitely been a concern for investors recently, these two categories are still at the very bottom of the barrel when it comes to the concerns of small business owners.

There’s a lot to glean from the historical trends in the chart below, so be sure to give it a long look!

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Below we chart each of the various problems for small business owners that are shown in the chart above. After the Trump tax cuts were passed, we saw a notable drop in the number of survey takers listing “Taxes” as their number one problem. That’s to be expected of course, but it’s still notable to see the impact the tax cuts had on sentiment.

Inflation concerns spiked significantly during the Financial Crisis, but it remains an after-thought as a problem for small business owners right now. We've seen a very slight tick up, but nothing significant yet. (You’ll see below that the “Cost of Labor” category has started to tick higher, though, which is an inflation measure as well).

Poor Sales is the main reading that you don’t want to see start ticking higher in this survey, and at this point, it’s still making new lows.

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Cost of Labor has been increasing as a problem for small business owners for more than six years now after bottoming in June 2012. Government Red Tape saw a huge rise throughout the first seven years of the Obama administration, but since late 2015 it has been drifting lower and lower.

While Poor Sales is hitting new lows as the number one problem for small businesses, Competition has been on the upswing basically since the lows of the Financial Crisis. The same goes for Quality of Labor, which small business owners currently rank as their number one problem.

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Just before the Financial Crisis, “Insurance Costs” were cited as the number one problem by 20% of small business owners. At that time it ranked right at the top of the list of problems. Once the Financial Crisis hit, though, small business owners became much more worried about things like Poor Sales, and the reading began to fall dramatically. Once Obamacare was passed in 2010, the reading for “Insurance Costs” remained at its lows, but it started to tick higher towards the end of 2012 and has been edging up ever since. 

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