The National Federation of Independent Business (NFIB) reported that small business optimism during April gained back just more than half of its sharp drop in March. The 2.1% m/m increase to a reading of 91.5 followed a 3.6% March drop that had been to 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.

The percentage of firms actually raising prices again rose m/m, to 20% which was the highest level since August, 2006. 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 rose to 31%, its highest since late 2005.

Twelve percent fewer respondents expected the economy to improve and only five percent (up from 3% in March) of the respondents expected to raise employment. The latest was near the least since 2003. Twenty one percent of firms 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.

Nine percent of firms indicated that credit was harder to get. That was near the highest level since 1993 and that was more than double the percentage during 2004.

Only six percent of respondents, up from five percent in March, thought that now was a good time to expand the business, the least since 1982, and expectations for earnings improved just slightly.

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.

Credit, Housing, Commodities, and the Economy is yesterday's speech by Janet L. Yellen, President and CEO, Federal Reserve Bank of San Francisco and it is available here.