Global| Jan 09 2007Small Business Optimism Fell Again
by:Tom Moeller
|in:Economy in Brief
Summary
Small business optimism fell for the second consecutive month in December. The 3.2% decline followed a 1.0% November slip and left optimism 10.4% below its peak in late 2004, according to the National Federation of Independent [...]
Small business optimism fell for the second consecutive month in December. The 3.2% decline followed a 1.0% November slip and left optimism 10.4% below its peak in late 2004, 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 dropped sharply while the percentage of firms with job openings and those expecting higher real sales in six months fell moderately.
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 also dropped sharply to a three year low.
The percentage of firms planning to raise average selling prices rose moderately but the percentage of firms actually raising prices fell to the lowest level since early 2004. 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 Economic Outlook, yesterday's speech by Federal Reserve Board Vice Chairman Donald L. Kohn, can be found here.
| Nat'l Federation of Independent Business | December | November | Y/Y | 2006 | 2005 | 2004 |
|---|---|---|---|---|---|---|
| Small Business Optimism Index (1986=100) | 96.5 | 99.7 | -4.9% | 98.9 | 101.6 | 104.6 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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