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Economy in Brief

Small Business Optimism Fell in August
by Tom Moeller September 14, 2004

The Small Business Optimism Index published by the National Federation of Independent Business (NFIB) fell 2.8% in August. The decline reversed all of the improvement in July and dropped the index to the lowest level since March.

The percentage of firms expecting the economy to improve fell to 32% from 37% in July.

The percent of firms planning to raise employment rose to 19%, the highest percentage this year. During the last ten years there has been a 61% correlation between these hiring plans and the three month growth in nonfarm payrolls.

The percentage of firms raising average selling prices ticked slightly higher to 21% from 20% in July.

During the last ten years there has been a 68% correlation between the level of the NFIB index and the two quarter % change in real GDP.

About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

Nat'l Federation of Independent Business Aug July Y/Y 2003 2002 2001
Small Business Optimism Index (1986=100) 102.9 105.9 -1.6% 101.3 101.2 98.4
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