Small Business Sentiment Continues to Decline

Washington, DC, Jan. 14, 2009--Small business sentiment posted its second lowest reading in 35 years in December, highlighting the worst post-war economic climate that has seen a dramatic cut back in consumer spending.

The National Federation of Independent Business (NFIB) said on Tuesday its small business optimism index fell 2.6 points to 85.2 in December, the second lowest reading in the survey's 35-year history.

The last time the index was near these levels was in 1980, when it fell to 80.1 in February. The survey was conducted through December 29 and covered 805 businesses.

"Owners, particularly retailers who make their year in the fourth quarter, were hoping that consumers would once again ride to the rescue. It didn't happen," said William Dunkelberg, chief economist at the NFIB.

"Profit trends are terrible, and since 80 percent of small business costs are typically compensation costs, owners had no choice but to trim jobs."