Small Business Confidence at 28-Year Low

Washington, DC, June 11, 2008--The National Federation of Independent Business's index of small business optimism fell 2.2 points in May to 89.3, the lowest reading since 1980.

"The current low readings, however, have not been accompanied by the declines in real spending and hiring as was the case in past recessions," said William Dunkelberg, NFIB's chief economist.

"Expectations are relatively more depressed in the current low index readings, thus an economy that is slow, but not experiencing negative growth," said Dunkelberg.

The number of owners citing inflation as their number one business problem is up 3 points to 17 percent, the highest reading since 1982.

Regionally, hiring plans are weak in many parts of the South and in the "auto belt," the group said.

Demand for credit has weakened as fewer businesses plan expansions or other capital expenditures in a slow-growth economy, NFIB said.

"Clearly lower rates are not stimulating capital spending, which has drifted lower as the Federal Reserve has cut rates," Dunkelberg said.