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Economy in Brief

Small Business Optimism Dipped
by Tom Moeller February 14, 2006

The January index of small business optimism from the National Federation of Independent Business (NFIB) reversed the small December rise and fell 0.3%. The latest index level was 6.1% lower than the peak during November 2004.

The latest m/m decline reflected fewer firms (6%) firms expecting the expecting the economy to improve, down from a high 51% during late 2003, although the percentage with one or more job openings jumped to the highest level (26%) since 2001.

During the last ten years there has been a 70% correlation between the level of the NFIB index and the two quarter change in real GDP.

The percentage of firms planning to raise average selling prices rose to 29% from 27% during all of last year but the percentage of firms actually raising average selling prices was stable at 18%, down from a 22% average during 2005. During the last ten years there has been a 60% correlation between the change in the producer price index and the level of the NFIB price index.

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 Jan Dec Y/Y 2005 2004 2003
Small Business Optimism Index (1986=100) 101.1 101.4 -2.4% 101.6 104.6 101.3
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