Research >> Economics
NFIB Small Business Optimism Index drops 0.1 points to 92.8
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The Optimism Index lost 0.1 points, falling to 92.8. Since monthly surveys were started in 1986, the Index has been below 93.0 fifty-six times, and 32 of those low readings have occurred since the recovery began in June 2009. News on the economy didn’t really change and neither did business owner’s views of the future for the economy – it’s as uncertain as it has been all year. Views about the current period as a “good time to expand” did gain 3 points, and the number of owners expecting business conditions to be better in six months gained 4 points over the pessimists, landing at a net 2 percent. However, these are hardly strong readings, even if improved.
Uncertainty has cast a cloud over the future for small business owners, making it difficult to make commitments to new spending and hiring. In a recently released NFIB Problems and Priorities survey (available at nfib.org/research), owners rated the severity of 75 business issues. Uncertainty about the economy ranked second while uncertainty about government policy ranked fourth. For perspective, securing long term funding was 56th and finding qualified workers 32nd. With a 50/50 election, according to the polls, and very different sets of policies that might be put in place, owners are unwilling to put their own capital on the line until the future path of the economy and economic policy becomes clearer.
MOST IMPORTANT PROBLEM: 2012
1 Rising Cost of Health Care Insurance
2 Uncertainty over Economic Conditions
3 Energy Costs
4 Uncertainty over Government Actions
5 Unreasonable Government Regulations
6 Federal Taxes on Business Income
7 Tax Complexity
8 Frequent Changes in Federal Tax Laws and Rules
9 Property Taxes
10 State Taxes on Business Income
25 Finding Out About Regulatory Requirements
31 Competition from Large Businesses
32 Finding Qualified Employees
56 Obtaining Long-Term Business Loans
Obviously, taxes and regulations are high on the list of concerns of business owners and these are issues that politicians will be addressing as the election approaches. Politicians have little understanding of the costs their actions impose on the private sector. “Frequent changes in the tax code” should not consistently rank in the top 15 problems that owners face. Labor market indicators remained weak, providing little hope for a recovery in employment. Capital spending plans, inventory investment plans, hiring plans were all soft, so prospects for more rapid growth in GDP are dim unless the election outcome produces euphoria (and more spending) among a significant segment of consumers. Economic activity appears to be driven mostly by population growth; there isn’t much beyond the 1 percent in growth this produces.
Posted: October 9, 2012 Tuesday 07:30 AM