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Economy in Brief

Small Business Optimism Slipped
by Tom Moeller December 12, 2006

The November index of small business optimism gave back most of its October rise and fell 1.0% to 99.7, according to the National Federation of Independent Business (NFIB). Nevertheless the figure remained well up from its June low of 96.7.

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.

Respondents expecting the economy to improve held at a recent high but the percentage of firms with job openings fell sharply.

During the last ten years there has been a 72% correlation between the NFIB percentage and the y/y change in nonfarm payrolls.

The percent planning to raise capital expenditures remained at a firm 31%, about the same as during the last two years..The percentage of firms planning to raise average selling prices ticked back up to a still low 22%. The percentage of firms actually raising prices also rose to a low 17%. 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 November October Y/Y 2005 2004 2003
Small Business Optimism Index (1986=100) 99.7 100.7 -1.5% 101.6 104.6 101.3
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