Small Business Confidence Continues Decline

San Francisco, CA, Sept. 9, 2008--Reflecting signs of a weaker economy and rising costs, small business owners' optimism continues to decline,  according to the recent Wells Fargo/Gallup Small Business Index.

Surveyed in July, small business owner optimism has fallen to 45, the lowest score reported since the survey began five years ago. The index has been declining since mid-2007.

"Although the Small Business Optimism Index hit a record low last month, the pace of decline has moderated," said Scott Anderson, Wells Fargo senior economist.

"This appears to be a direct reflection of economic conditions, which we expect to remain stagnant into the second half of 2009. Many economic and financial problems are weighing on the U.S. consumer, leading to decreased consumer spending, and this is having a negative impact on small business owners' optimism. However, a steep contraction in economic activity may yet be avoided."

The most recent results show a 3-point drop from April 2008, and a 38-point drop from January 2008. The index has dropped a total of 69 points from its highest score of 114, recorded in December 2006.

The index is the sum of "current situation" and "future expectations" of small business owners for six key measures: financial situation, cash flow, revenues, capital allocation, job hiring, and credit availability.

While the "present situation" score increased one point from last quarter, a 4-point drop in "future expectations" contributed to the overall index decline, driven by business owners' anticipation of lower capital spending and reduced credit availability.