Small Business Optimism Slides in July
While the national unemployment rate dipped marginally, for small businesses, the employment story is not a positive one.For the fifth consecutive month, the National Federation of Independent Business monthly Small-Business Optimism Index fell, dropping 0.9 points in July-a larger decline than in each of the previous three months-and bringing the Index down to 89.9. This is below the average Index reading of 90.2 for the last two-year recovery period. Expectations for future real sales growth and improved business conditions were the major contributors to the decline in optimism. With the repercussions of the debt compromise yet unknown, next month's report will provide a more complete picture of the reaction on Main Street, the organization reported. The percent of owners citing poor sales as their top problem-the long-time primary complaint of firms-has faded a few points, and reports of sales trends are better than a few months ago. However, the July survey anticipates slow growth for the remainder of the year, high unemployment rates, inflation rates that are too high and little progress on job creation. The report is based on the responses of 1,817 randomly sampled small businesses in NFIB's membership, surveyed throughout the month of July.
"Given the current political climate, the protracted debate over how to handle the nation's debt and spending, and the now this latest development of the debt downgrade, expectations for growth are low and uncertainty is great," said NFIB chief economist Bill Dunkelberg. "At the two-year anniversary of the expansion, the Index is only 3.4 points higher than it was in July 2009. And considering the confidence-draining performance of policy makers, there is little hope that Washington will stop hemorrhaging money and put spending back on a sustainable course. Perhaps we might begin referring to the -Small-Business Pessimism Index' from now on."