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Small Business Optimism at a Five-Month High: NFIB

Concerns about political gridlock and fiscal cliff impact spending and hiring

| BY Donald Liebenson

Small business optimism components


Small business optimism is being tamped down by concerns over continued political gridlock and the looming fiscal cliff, according to the National Federation of Independent Business (NFIB) Small Business Optimism Index released Tuesday.

The survey of 2,029 randomly sampled NFIB member small businesses was conducted before last Tuesday’s election.

The Index rose 0.3 to a five-month high 93. But the percent of owners uncertain about whether business conditions will be better or worse in six months reached an unprecedented 23 percent, eclipsing the pre-recession record of 15 percent reached during the administration of Jimmy Carter, the NFIB reported in a statement.

Since the declared end of the recession in July 2009, the Index has been higher than 93.1 only eight times. It has vacillated between 88-94 for much of the last three years and has never exceeded 95.

Four of the 10 survey components rose in October, but the Index remains mired in “solidly pessimistic—and recessionary territory,” said NFIB chief economist William Dunkelberg in a statement. “The election is over and Washington looks much like it did on November 5. The fear of stalemate among the small-business community is palpable, as the looming fiscal cliff and the threat of higher costs and more taxes are very real possibilities come January. Until then, not knowing the direction of the economy will always have a dampening impact on spending and hiring.”

Among the Index components that posted increases in October, the frequency of reported capital outlays over the past six months rose 3 points to 43 percent, while the percent of owners planning capital outlays in the next three to six months rose one point to 22 percent. The net percent of owners expecting higher real sales rose two points to 3 percent. Reports of positive trends for earnings—the major source of capital for small firms to finance growth and expansion and repay debts incurred to invest in their firms--improved one point to -26 percent.

But weak sales is still the reported primary business problem for 22 percent of small business owners surveyed.

About the Author

Donald Liebenson

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.