The April NFIB Small Business Optimism report was released today, April 9. The headline of the Press Release is “Small-Business Owner Optimism Cannot Be Sustained.” The subtitle is “After Three Months of Slow Growth, Owner Confidence is Heading the Wrong Direction Again.”
The Index of Small Business Optimism declined 1.3 points in March to 89.5.
Here are some excerpts from the Press Release that I find particularly notable (but don’t necessarily agree with) :
“After another false start, small-business confidence has sputtered and stalled again. For the sector that produces half the private GDP and employs half the private sector workforce—the fact that they are not growing, not hiring, not borrowing and not expanding like they should be, is evidence enough that uncertainty is slowing the economy,” said NFIB chief economist Bill Dunkelberg. “Virtually no owners think the current period is a good time to expand, because they simply don’t know what the future holds. So why invest? And with the lack of any sustainable fiscal policy or a federal budget, no one’s banking that Washington will be at forefront of any meaningful change. Overall, it appears that there will be little growth coming from the small business half of the economy; as the world economy slows, even big business may suffer.”
In the March report, over three-quarters of business owners reported that they expect business conditions in six months to remain the same as they are now or worse. Aggregated, there are no plans to create new jobs in the coming months, although some parts of the U.S. will experience job growth and some sectors will create new jobs (housing
and energy in particular). A near record low percentage of small-business owners claim that credit is their top business problem (three percent); the greatest business problem for 23 percent of owners is taxes and regulations and red tape for 21 percent of owners.
Good Time to Expand. Only four percent of owners surveyed characterized the current period as a good time to expand facilities (down 1 point), and historically a very weak number. The net percent of owners expecting better business conditions in six months was a net negative 28 percent, unchanged from February but 7 points better than December). These readings are among the lowest in the 40 year history of the NFIB survey.
Here is a chart of the NFIB Small Business Optimism chart, as seen in Doug Short’s April 9 post titled “Small Business Sentiment: Contraction after Three Months of Slow Growth” :
(click on chart to enlarge image)
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1562.02 as this post is written