Small Business Outlook Remains Depressed

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Old-fashioned Main StreetThe National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index rose a meager 0.5 points in December to 88, only slightly better than the November reading that was the second-lowest since March 2010. The NFIB says that "the deterioration of labor market components" and the number of business owners who expect conditions to get worse are the main factors behind the poor survey results. The Bloomberg consensus estimate for the index was 87.9.

The NFIB's chief economist said:

Congress played chicken right up to the end of the year, leaving small-business owners with no new information about the economy's future - no sense of how much their taxes would increase or if the economy would go over the now infamous 'cliff. The eleventh hour 'deal' has brought marginal certainty about tax rates and extenders and will provide some relief to owners, but it certainly doesn't guarantee a more positive forecast for the economy. The January survey results will be far more enlightening about how the sector views the deal - higher taxes and minimal spending cuts may not be a panacea. And let's not forget what is looming on the horizon: a debate over the debt limit and a regulatory avalanche of historic proportions about to spill out into the country.

Unlike last week's report on nonfarm payrolls from the U.S. Bureau of Labor Statistics, the NFIB survey indicates that job gains in December were "essentially zero."

On a seasonally adjusted basis, only 18% of all business owners reported higher sales over the past three months, while 30% reported lower sales.

Asked to identify the single most important small business issue, 23% named taxes, 21% named regulation requirements and 19% said poor sales. A year ago, poor sales was the top concern of 23% of survey respondents, while 21% named taxes as the single biggest issue and 20% called out regulation.

The NFIB press release is available here.

Filed under: 24/7 Wall St. Wire, Economy, Research
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