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| Small-business owners pessimistic about economic growth and recovery | Small-business owners pessimistic about economic growth and recovery |
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| While most people consider the fiscal cliff a snooze, there's one group that seems extremely worried: small-business owners. | While most people consider the fiscal cliff a snooze, there's one group that seems extremely worried: small-business owners. |
| Small-business owners, it seems, have little faith in Washington, and are particularly upset at the results of the election, which causes them to expect the next six months to be very rough financially, according to the most recent survey of small-business sentiment. | Small-business owners, it seems, have little faith in Washington, and are particularly upset at the results of the election, which causes them to expect the next six months to be very rough financially, according to the most recent survey of small-business sentiment. |
| The National Federation of Business puts out a small-business optimism index every month – except that it's been a long while since any optimism has been in evidence among small businesses. In fact, if you follow the NFIB index over time, it has suggested that small-business owners believe the recession never ended. | The National Federation of Business puts out a small-business optimism index every month – except that it's been a long while since any optimism has been in evidence among small businesses. In fact, if you follow the NFIB index over time, it has suggested that small-business owners believe the recession never ended. |
| The index is particularly morose right now. The small-business sentiment index, which is marked on a scale of 1-100, fell to 87.5 in November. That's a record low. It's also a big surprise: the NFIB index was around 93.1 in October, and economists were expecting it to hover around 92.5 for November. | The index is particularly morose right now. The small-business sentiment index, which is marked on a scale of 1-100, fell to 87.5 in November. That's a record low. It's also a big surprise: the NFIB index was around 93.1 in October, and economists were expecting it to hover around 92.5 for November. |
| The NFIB separated the states impacted by hurricane Sandy from the others, then found "the data makes clear that the election was the primary cause of the decline in owner optimism". | The NFIB separated the states impacted by hurricane Sandy from the others, then found "the data makes clear that the election was the primary cause of the decline in owner optimism". |
| NFIB chief economist Bill Dunkelberg explained in a statement: "The storm had a significant impact on the economy, no doubt, but it is very clear that a stunning number of owners who expect worse business conditions in six months had far more to do with the decline in small-business confidence. Nearly half of owners are now certain that things will be worse next year than they are now. Washington does not have the needs of small business in mind. Between the looming 'fiscal cliff', the promise of higher healthcare costs and the endless onslaught of new regulations, owners have found themselves in a state of pessimism. We are forced to ask: is this the new normal?" | NFIB chief economist Bill Dunkelberg explained in a statement: "The storm had a significant impact on the economy, no doubt, but it is very clear that a stunning number of owners who expect worse business conditions in six months had far more to do with the decline in small-business confidence. Nearly half of owners are now certain that things will be worse next year than they are now. Washington does not have the needs of small business in mind. Between the looming 'fiscal cliff', the promise of higher healthcare costs and the endless onslaught of new regulations, owners have found themselves in a state of pessimism. We are forced to ask: is this the new normal?" |
| Jim O'Sullivan, chief US economist at High Frequency Economics, said in a note to clients that the NFIB index has been overly pessimistic about the economy and that there are few other economic reports that indicate such low confidence in the economy. | Jim O'Sullivan, chief US economist at High Frequency Economics, said in a note to clients that the NFIB index has been overly pessimistic about the economy and that there are few other economic reports that indicate such low confidence in the economy. |
| "We would add that other reports have not corroborated such weakening," he said Tuesday. "Indeed, they have generally shown surprising resilience – not strong, but no sign of sudden new weakness. Even before the plunge, the index was in what has historically been recession territory, although the index has not been a reliable indicator for growth in this cycle. Growth has been weak, but not that weak." | "We would add that other reports have not corroborated such weakening," he said Tuesday. "Indeed, they have generally shown surprising resilience – not strong, but no sign of sudden new weakness. Even before the plunge, the index was in what has historically been recession territory, although the index has not been a reliable indicator for growth in this cycle. Growth has been weak, but not that weak." |
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