Small Business Optimism Down, Survey Shows

Washington, DC, Aug. 11, 2009--The National Federation of Independent Business monthly Small Business Economic Trends survey showed that small business owner optimism fell 1.3 points to 86.5, producing the second monthly decline in a row.

However, it's still above the March reading of 81.0, the lowest reading of this recession.

The main cause was a decline in expectations that business conditions would improve in six months. The percent of owners expecting business conditions to deteriorate lost 10 percentage points from June, 15 points from May, this in spite of increasingly positive signs that the economy is improving. “Nineteen months of recession are wearing heavily on Main Street,” said Bill Dunkelberg, NFIB’s chief economist.

“It’s not enough that small business produce half the private GDP, employ the bulk of the private sector workforce and generate most of the new jobs created, now they are expected to finance the new experiments of Congress and the president such as healthcare reform, auto industry bailouts and union pension fund bailouts,” said Dunkelberg.

Only 5 percent of small business owners think now is a good time to expand their business, and more firms expect their real sales volumes to decline than grow (by 11 percentage points). Job reductions have been cut almost in half, but there are still more reductions than new hires.

Credit markets remain dicey, with 15 percent reporting that loans were harder to get in the current period than in the prior quarter, similar to the pattern observed in each boom and recession since 1983.