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Economy in Brief

U.S. Small Businesses Show Broad-based Concerns
by Tom Moeller  April 10, 2012

Small business optimism deteriorated last month. The National Federation of Independent Business reported that its Optimism Index fell to 92.5 in March from an unrevised 94.3 February. The latest was the lowest since November. Underlying the deterioration was an across-the-board increase in pessimism. The percentage expecting the economy to improve fell to its lowest since November, so the percent of firms planning to raise employment dropped to zero, its least since last May. In addition, the percentage of firms expecting higher real sales in six months fell to its lowest since November. Moreover, the percentage reporting that credit was harder to get increased to its highest since August. Ironically, in an apparent attempt to bolster top-line revenues, the percentage of firms lifting prices rose to its highest since July and the percent planning to raise prices was its highest May.

The most important problems faced by small business were poor sales (22%), taxes (20%), government requirements (19%), inflation (9%), competition from large businesses (7%), insurance cost /availability (6%), quality of labor (6%), cost of labor (4%) and financial & interest rates (3%).

Roughly 24 million small businesses exist in the U.S. and they create 80% of all new jobs. The NFIB figures can be found in Haver's SURVEYS database.

National Federation of Independent Business Mar Feb Jan Mar'11 2011 2010 2009
Small Business Optimism Index (SA,1986=100) 92.5 94.3 93.9 91.9 91.4 89.9 86.7
Firms Expecting Higher Real Sales In Six Months (Net %) 8 12 10 6 3 1 -11
Firms Expecting Economy To Improve (Net %) -8 -6 -3 -5 -9 -1 -0
Firms With One or More Job Openings (Net %) 15 17 18 15 14 10 9
Firms With Few or No Qualified Applicant For Job Openings (Net %) 32 31 31 29 32 27 --
Firms Reporting That Credit Was Harder To Get (Net %) 11 8 8 8 10 13 14
Firms Raising Avg. Selling Prices(Net %) 6 1 -1 9 5 -12 -20
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