Global| Apr 08 2008U.S. Small Business Optimism Lowest Since 1980
by:Tom Moeller
|in:Economy in Brief
Summary
According to the National Federation of Independent Business (NFIB), small business optimism during March fell to the lowest level since 1980. The 3.6% m/m decline to a reading of 89.6 followed a modest 1.2% February rise. The drop [...]
According to the National Federation of Independent Business (NFIB), small business optimism during March fell to the lowest level since 1980. The 3.6% m/m decline to a reading of 89.6 followed a modest 1.2% February rise. The drop lowered the level of sentiment 7.3% below the 2007 average and it was the lowest level since the short, "credit crunch" recession of 1980.
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.
Seven percent of firms indicated that credit was harder to get. That was near the highs of the last several months and it was more than double the percentage during 2004.
Twenty three percent fewer respondents in March expected the economy to improve and only three percent of the respondents expected to raise employment. That was the least since 2003. During the last ten years there has been a 72% correlation between the NFIB employment percentage and the y/y change in nonfarm payrolls.
Only five percent of respondents thought that now was a good time to expand the business, the least since 1982, and expectations for earnings fell to the lowest level since 1982.
The percentage of firms actually raising
prices rose m/m to 18% which was the highest level since July of 2007.
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 also rose to 29%, its highest since August 2006.
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 | March | February | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Small Business Optimism Index (1986=100) | 89.6 | 92.9 | -7.9% | 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.
More Economy in Brief
