Study: Small Business Owner Optimism Lowest Since 1980s Recession
A study released by the National Federation of Independent Businesses (NFIB) finds the group’s monthly small business optimism index, based on a survey of its 600,000 members, is at its lowest point since the recession of the early 1980s.
The index also shows that the number of business owners raising prices last month is up while fewer people reported increases in earnings and capital outlays.
In a prepared statement, NFIB Chief Economist William Dunkelberg said the downturn is not creating cash flow or credit problems among small businesses.
“It’s a Wall Street issue,” Dunkelberg said in the press release. “The inflation problem is getting worse, not better, as the economy weakens.”
In related news, LibertyBank’s small business index finds that a plan by the Federal Reserve to raise short-term interest rates could translate into higher borrowing expenses for small businesses, offsetting any gains realized from anti-inflation measures taken by the Federal Reserve in recent months.
Some observers predict that the federal funds target rate could be increased by the Fed as early as the first week of August. Most forecasters, however, think the Fed will raise the target rate in late 2008, or possibly sometime in early 2009, according to the LibertyBank report.
LibertyBank’s small business index for Oregon decreased to 79.2 in June from 80 in May. The index held at 100 in 1997, the original year it was created. Less favorable conditions for small businesses are associated with a lower index number, the report says.
The index uses Oregon’s unemployment rate as the most important component in determining the overall mood of small business owners; when unemployment is up, LibertyBank reports it as a positive, saying it suggests that small business owners have better access to labor markets.
Oregon’s unemployment rate was about 5.6 percent in June, an increase of .2 percent over May. Oregon created about 6,700 jobs from June 2007 to June 2008 compared to 14,300 jobs created during the 12 months that ended in June 2007.
