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Economy in Brief

Small Business Optimism Rebounded
by Tom Moeller October 12, 2004

The September Small Business Optimism Index published by the National Federation of Independent Business (NFIB) rose 1.6% and recouped some of the prior month's 2.8% decline. The index remained 2.2% below last December's peak level.

During the last ten years there has been a 74% correlation between the level of the NFIB index and the two quarter change in real GDP.

The percentage of firms expecting the economy to improve rose to 36% from 32% in August but also remained well below last year's high.

The percent of firms planning to raise employment dropped back to 14% from last month's 2004 high. During the last ten years there has been a 63% correlation between these hiring plans and the three month growth in nonfarm payrolls.

The percentage of firms raising average selling prices fell to 19% from 21% in August.

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 Sept Aug Y/Y 2003 2002 2001
Small Business Optimism Index (1986=100) 104.5 102.9 2.6% 101.3 101.2 98.4
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