Global| Jul 08 2008U.S. Small Business Optimism Stable, Near 1975 Low
by:Tom Moeller
|in:Economy in Brief
Summary
Small business optimism, according to the National Federation of Independent Business (NFIB), was about unchanged in June but, at 88.2, the index remained near the lowest level since January 1975, its second lowest level on record. [...]
Small business optimism, according to the National Federation of Independent Business (NFIB), was about unchanged in June but, at 88.2, the index remained near the lowest level since January 1975, its second lowest level on record.
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.
Improvement in the percentage of respondents with one or more job openings was offset by deterioration in the percent expecting the economy to improve. Twenty-one percent had one or more job openings. 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 percentage planning to raise employment reversed its May deterioration but remained near the least since early-2003. 
Seven percent of firms indicated that credit was harder to get, near the highest level since 1993 and that was about double the percentage during 2004.
Four percent of respondents thought that now was a good time to expand the business, the least since 1982, but 33% of respondents expected lower earnings, a record low.
The percentage of firms actually raising prices surged to 29%, the highest level since 1981. During the last ten years there has been a 64% 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 surged to 36%, also its highest since 1981.
Twenty percent of respondents indicated that inflation was the single most important problem, the highest since 1981 and four times the percentage of the prior four years.
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 | June | May | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Small Business Optimism Index (1986=100) | 89.2 | 89.3 | -7.1% | 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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