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Economy in Brief

U.S. Small Business Optimism Evaporates
by Tom Moeller  December 11, 2012

The National Federation of Independent Business indicated that its November Index of Small Business Optimism collapsed to 87.5 from 93.1 in October. The figure was its lowest since March 2010. A net negative 35% of firms expected the economy to improve, a record low. The percent expecting higher real sales in six months also fell to its lowest (-5%) in nearly a year. The percent of firms with one or more job openings improved m/m to a relatively low 17%. A modest 5% percent of firms planed to increase employment and a relatively low 22% planned on increasing capital expenditures.

The percentage of firms planning to raise worker compensation dropped out of bed to 4%, down from its February high of 12%. The percentage of firms reporting that credit was harder to get jumped to 9%, its highest level in six months but still down versus the early-2009 high of 16%. No firms were lifting average selling prices while the 16% who were planning to raise prices was down from the recovery high of 24%.

The most important problems faced by small business were poor sales (23%), taxes (23%), government requirements (18%), insurance cost & availability (7%), inflation (6%), quality of labor (6%), competition from large businesses (5%), 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 typical NFIB member employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver's SURVEYS database. 

National Federation of Independent Business Nov Oct Sep Nov'11 2011 2010 2009
Small Business Optimism Index (SA,1986=100) 87.5 93.1 92.8 92.0 91.4 89.9 86.7
Firms Expecting Higher Real Sales In Six Months (Net %) -5 3 1 4 3 1 -11
Firms Expecting Economy To Improve (Net %) -35 2 2 -12 -9 -1 -0
Firms With One or More Job Openings (Net %) 17 16 17 16 14 10 9
Firms With Few or No Qualified Applicants For Job Openings (Net %) 36 38 41 35 32 27 --
Firms Reporting That Credit Was Harder To Get (Net %) 9 7 6 10 10 13 14
Firms Raising Avg. Selling Prices (Net %) 0 5 6 0 5 -12 -20
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