Global| Feb 10 2009U.S. Small Business Optimism Fell Even Further; Pricing At All-time Low
by:Tom Moeller
|in:Economy in Brief
Summary
According to the National Federation of Independent Business (NFIB), small business optimism fell again last month. The index level of 84.1 was down 1.3% month-to-month. The latest level was the lowest since early-1980 and was the [...]
According to the National Federation of Independent Business (NFIB), small business optimism fell again last month. The index level of 84.1 was down 1.3% month-to-month. The latest level was the lowest since early-1980 and was the second lowest level on record.
During the last ten years there has been a 49% correlation between the level of the NFIB index and the two-quarter change in real GDP.
The percentage of firms planning to raise prices fell further to 2%, a new record low. Price discounts were evident as the percentage of firms actually raising prices fell further into negative territory, and the reading was a record low. During the last ten years there has been a 69% correlation between the y/y change in the producer price index and the level of the NFIB price index.
The percentage expecting the economy to improve remained in negative territory. The percentage reporting that now is a good time to expand the business fell back to near the lowest since 2003. During the next 3-6 months, plans for capital spending increased slightly but was still near the lowest level since 1975.
The percentage planning to raise employment remained at last month's low of a net negative 6% while the percentage of respondents with one or more job openings dropped further to 11%, the least since 1992. During the last ten years there has been a 71% correlation between the NFIB employment percentage and the y/y change in nonfarm payrolls.
The percent expecting credit conditions to ease was about unchanged, near its lowest level since 1980. The percent expecting higher real sales in six months fell to a net negative 20%, near the lowest since 1980.
The largest, single most important problems seen by business were poor sales (28%), taxes (19%), government requirements (11%), insurance cost and availability (9%), competition from large businesses (6%) and inflation (6%).
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
The NFIB figures can be found in Haver's SURVEYS database.
| Nat'l Federation of Independent Business | January | December | Y/Y | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| Small Business Optimism Index (SA, 1986=100) | 84.1 | 85.2 | -8.4% | 89.8 | 96.7 | 98.9 |
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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