Global| Dec 09 2008U.S. Small Business Optimism Roughly Steady at 1975 Low
by:Tom Moeller
|in:Economy in Brief
Summary
According to the National Federation of Independent Business (NFIB), small business optimism held roughly steady last month. At 87.8, the index rose 0.3% m/m from October after that month's 5.8% decline to the lowest level since [...]
According to the National Federation of Independent Business (NFIB), small business optimism held roughly steady last month. At 87.8, the index rose 0.3% m/m from October after that month's 5.8% decline to the lowest level since early-1975.
During the last ten years there has been a 50% correlation between the level of the NFIB index and the two-quarter change in real GDP.
The percentage expecting the economy to improve rose very slightly after a large October decline. The percentage reporting that now is a good time to expand the business also rose slightly but remained near the lowest since 1982. During the next 3-6 months, plans for capital spending ticked up from October but was near the lowest level since 1975.
The percentage planning to raise employment fell into negative territory while the percentage of respondents with one or more job openings remained at 14%, 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 ticked up slightly but remained near its lowest level since 1980. The percent expecting higher real sales in six months also remained near its lowest since 1980.
The largest, single most important problems seen by business were poor sales (25%), taxes (21%), inflation (9%), insurance cost and availability (9%).
The percentage of firms actually raising prices fell to zero, the lowest since early 2002. 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 of firms planning to raise prices also fell further to 11% which was the least since 2001.
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.
Restoring Financial Intermediation by Banks: The Role of Regulators is yesterday's speech by Fed Vice Chairman Donald L. Kohn and it it is available here.
| Nat'l Federation of Independent Business | November | October | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Small Business Optimism Index (1986=100) | 87.8 | 87.5 | -7.0% | 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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