Global| Jan 08 2008Small Business Optimism Remained Low
by:Tom Moeller
|in:Economy in Brief
Summary
In December, small business optimism ticked up a slight 0.2% following sharp declines during most of the year according to the National Federation of Independent Business (NFIB). The latest was near the lowest level since September [...]
In December, small business optimism ticked up a slight 0.2% following sharp declines during most of the year according to the National Federation of Independent Business (NFIB). The latest was near the lowest level since September 1993.
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.
Virtually all of last month's slight increase seemed to come as the percentage of firms planning to raise capital expenditures rose off of this cycle's low.
Also, the percent with one or more job openings rose slightly from the lowest level since 2003. During the last ten years there has been a 72% correlation between the NFIB percentage and the y/y change in nonfarm payrolls. The percentage of firms planning to raise employment remained depressed.The percentage of firms indicating that credit was more difficult to get remained stable after steady increases through 2007.
Now was a good time the business remained near the low of the last three years.
The percentage of firms expecting higher real sales in six months again fell sharply to the lowest since 2003.
Respondents expecting the economy to improve remained near the low of the last two years..The percentage of firms actually raising prices rose m/m. 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. The percentage of firms planning to raise prices was stable at its highest level in a year.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.The Economic Outlook and the Fed's Roles in Monetary Policy and Financial Stability is today's speech by Charles I Plosser, President of the Federal Reserve Bank of Philadelphia and it can be found here.
| Nat'l Federation of Independent Business | December | November | Y/Y | 20007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Small Business Optimism Index (1986=100) | 94.6 | 94.4 | -2.0% | 96.7 | 98.9 | 101.6 |
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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