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Small Business Confidence Nears a 3-Year Low: Report

By Ideas Lab Staff December 13, 2012

Two major events - the presidential election and Hurricane Sandy - have sent small business owner confidence plummeting in the latest optimism index by the National Federation of Independent Business.

The NFIB reports that its Index dropped 5.6 points, bottoming out at 87.5, which it says is one of the lowest readings in survey history.

While the hurricane did much to hinder confidence among small business owners, the NFIB says “the data makes clear that the election was the primary cause of the decline in owner optimism”.

“Nearly half of owners are now certain that things will be worse next year than they are now,” said NFIB chief economist Bill Dunkelberg. “Washington does not have the needs of small business in mind. Between the looming ‘fiscal cliff,’ the promise of higher health-care 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?”

Credit: NFIB

The Index reports a drop in the percent of owners optimistic about business conditions in the next six months, down 37 points to negative numbers.

The Index has only been lower seven times in its history – late 2008 and early 2009, and before then, only in 1975 and 1980.

These owners list higher healthcare costs, and new regulations, “poor sales”, a weak climate for investment and expansion, unmet credit needs among their greatest concerns, according to the Index.

At the same time, Bank of America has released its own findings on surveying small business owners, and found most to be confident about their own businesses, but worried about the state of the economy.

While more than a third of those small business owners think the national economy will improve over the next 12 months, “they have significant concerns about the coming
year with the effectiveness of US government leaders leading the way,” the survey reported.