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Economy in Brief

Small Business Optimism Unchanged
by Tom Moeller March 8, 2005

The Small Business Optimism Index for February reported by the National Federation of Independent Business (NFIB) was unchanged versus January. The percentage of firms expecting the economy to improve fell further to 20% versus 47% last November.

During the last ten years there has been a 64% correlation between the level of the NFIB index and the two quarter change in real GDP.

The percent of firms planning to raise employment rose slightly to 16%. During the last ten years there has been a 67% correlation between these hiring plans and the three month growth in nonfarm payrolls. The percentage of firms with one or more job openings rose to 24%, the highest level since 2001.

The percentage of firms planning to raise capital spending fell slightly to 33% roughly the average during 2004 but still up versus 29% in 2003.

The percentage of firms raising average selling prices rose to 19%, the highest since October.

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 Feb Jan Y/Y 2004 2003 2002
Small Business Optimism Index (1986=100) 103.6 103.6 1.0% 104.6 101.3 101.2
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