Small Biz Owners Optimistic?
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Mark Marich
As the White House fine tunes its messaging for the upcoming State of the Union Address, small business owners are starting to feel a bit more confident about the economic outlook, according to the latest survey by the National Federation of Independent Businesses. A commonly used phrase in the NFIB work last year was ‘stubbornly cautious’. However, the new numbers show continued growth in optimism--the December figures were positive for the fourth consecutive month.
But before you get too excited, consider that the jump puts the Index “still 6 points below the pre-recession average and more than 10 points below the same point in the recovery from the 2001 recession.”
Additional highlights from the latest Optimism Index include:
- Over the next three months, 9 percent plan to increase employment (down 2 points), and 8 percent plan to reduce their workforce (down 3 points), yielding a seasonally adjusted net 6 percent of owners planning to create new jobs. This is a 1 point decline from November but still one of the strongest readings for 2011 and the second highest reading since September 2008. Forty-five (45) percent of owners hired or tried to hire in the past three months, but 34 percent of them reported few or no qualified applicants for the position(s). The NFIB unemployment forecast models (based on reports of poor sales or on job openings and plans to increase employment shown below) indicates that the unemployment rate will drift into the mid to low 8 percent range in 2012.
- Access to credit continues to rank at the bottom of concerns, with only 4 percent reporting financing as their No. 1 business problem. Ninety-three (93) percent of owners reported that all their credit needs were met or that they were not interested in borrowing. Seven percent reported that not all of their credit needs were satisfied, the record low is 4 percent, reached in 2000. Fifty percent said they did not want a loan or 64 percent if including those who did not answer the question, presumably uninterested in borrowing as well. While weak sales remain the top business problem, lack of demand for credit will likely continue. Thirty-one percent of all owners reported borrowing on a regular basis, down 3 points. A net 8 percent reported loans “harder to get” compared to their last attempt, for a drop of 2 points. The net percent of owners expecting credit conditions to ease in the coming months was a seasonally adjusted negative 9 percent (more owners expect that it will be “harder” to arrange financing than easier), a 1 point improvement over November.
Will this week’s State of the Union help or hurt confidence? It’s too soon to tell, but Congressman Sam Graves, chair of the House Committee on Small Business, outlined his suggestions on what entrepreneurs and small business owners really want from government—fewer regulatory burdens and lower taxes.
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