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Economy in Brief

by Tom Moeller U.S. Small Business Optimism in July Recovered August 14, 2007

Small business optimism in July recovered most of its recent decline and rose 1.7% to the highest level since February, 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 improved but the percentage of firms with one or more job openings fell.

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 expecting higher sales in six months rose but remained at a fairly low level and the percentage of firms planning to raise capital expenditures fell back to near the three year low.

The percentage of firms actually raising prices was unchanged m/m but was near the highest level in nearly a 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.

Nat'l Federation of Independent Business July June Y/Y 2006 2005 2004
Small Business Optimism Index (1986=100) 97.6 96.0 -0.5% 98.9 101.6 104.6
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