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Economy in Brief

by Tom Moeller Small Business Optimism Fell In June July 10, 2007

Small business optimism fell for the fourth month this year. The 1.2% decline followed a modest 0.4% increase during May, according to the National Federation of Independent Business (NFIB).

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 remains low as did the percentage of firms planning to increase employment.

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

The percent planning to raise capital expenditures remained near the three year low.

The percentage of firms planning to raise average selling prices fell to the lowest in three and one months but the percentage of firms actually raising prices rose to the highest level this year. 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.

The Role of Small and Large Businesses in Economic Development from the Federal Reserve bank of Kansas City can be found here.

Nat'l Federation of Independent Business June May Y/Y 2006 2005 2004
Small Business Optimism Index (1986=100) 96.0 97.2 -0.7% 98.9 101.6 104.6
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