Small-business owners skeptical of recovery

From Marketwatch | 11/10/09

Survey shows slight improvement, but most indicators remain negative

WASHINGTON (MarketWatch) -- Small-business owners haven't seen much
improvement in the U.S. economy and more are expected to cut jobs
instead of adding them over the next three months, a monthly survey
shows.

The National Federation of Independent Business Index of Small Business
Optimism edged up 0.3 of a point in October to a reading 89.1, but the
index has been below 90 for six straight quarters. In the 1980-82
recession, by comparison, the index fell below 90 for only one quarter.

'The recession is
now 22 months old, straining the financial resources of more and more
small firms. The economy may have turned, but it's a slow turn so far.'

 

William Dunkelberg, NFIB

"The October gain was minor, so the good news is still less bad news,"
said William Dunkelberg, NFIB's chief economist, in a statement.

Four of the ten index components rose, while four declined and two were unchanged.

The main small-business index reached its lowest point in the current downturn in March, when it fell to 81.

Over the next three months, 16% (unchanged) of small-business owners
surveyed said they plan to reduce jobs, while 9% (up two points) plan
to add more workers.

In the prior three months, 8% of small-business owners created new jobs
and 19% eliminated positions, NFIB said. "The 'job generating machine'
is still in reverse," the federation said.

Why Won't The Jobs Come Back?

Watch the Journal Editorial Report on the FOX News Channel on Saturdays at 2 and 11 p.m. EDT.

The
NFIB said small-business owners continue to reduce salaries and
benefits "at a record pace" and have sharply scaled back capital
spending because of a persistent weakness in consumer outlays.

A majority have reduced inventories and about 30% cut prices, resulting in lower profits.

"Poor sales and price cuts are responsible for much of the weakness in profits," Dunkelberg said.

Only 11% of owners believe business conditions will improve in the next
six months, which is historically low, the federation said.

Moreover, "there is nothing on the table in Washington to make owners
more optimistic about the future, a recipe for depressed expectations
and spending plans," NFIB said.

"The recession is now 22 months old, straining the financial resources
of more and more small firms," Dunkelberg said. "The economy may have
turned, but it's a slow turn so far."