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Economy in Brief

Small Business Optimism Slipped
by Tom Moeller September 13, 2005

The National Federation of Independent Business (NFIB) reported that their index of optimism amongst small businesses fell 0.2% in August and reversed a small up tick the month prior.

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.

A greater percentage of firms expected higher real sales in six months but a lower percentage expected the economy to improve.

The percentage of firms with one or more job openings jumped back to the five year high of 24%. During the last ten years there has been a 67% correlation between hiring plans and the three month growth in nonfarm payrolls.

The percentage of firms planning to raise capital spending fell as did the percentage of firms raising average selling prices rose.

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 2004 2003 2002
Small Business Optimism Index (1986=100) 100.9 101.1 -1.9% 104.6 101.3 101.2
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