Small biz losing faith in recovery

Small business owners are growing less confident about the economy, reversing a recent trend of rising optimism, according to a survey released Tuesday.

The National Federation of Independent Business reported that its monthly Index of Small Business Optimism dropped 3.2 points in June, following modest gains in previous months.

Culture_Currency(2).JPGBusiness owners surveyed are most concerned about poor sales (30 percent), taxes (20 percent) and government regulations and red tape (15 percent.)

The Index fell in June to 89, after posting three consecutive monthly increases.

“The persistence of Index readings below 90 is unprecedented in survey history. The performance of the economy is mediocre at best, given the extent of the decline over the past two years. The small business sector is not on a positive trajectory and with this half of the private sector “missing in action”, the poor growth performance is no surprise,” the NFIB report says.

Survey results paint a dismal picture. Over the next three months, only 10 percent of small business owners plan to create new jobs and 8 percent plan to cut jobs. Nineteen percent expect to make capital expenditures in the next few months, three points above the NFIB’s 35-year survey low. Sales expectations are not great, among the owners surveyed.

“The net percent of owners expecting real sales gains lost 10 points, falling to a net negative five percent of all owners (seasonally adjusted). Small business owners continued to liquidate inventories and weak sales trends gave little reason to order new stock,” the report says.

Can’t blame small biz owners for being pessimistic. The recovery has been sluggish and the politicians of both major parties are unwilling to do what’s necessary to restore confidence in the economy.

Democrats want to let the Bush tax cuts expire — not a good idea when so many small businesses are struggling to survive and need every dollar they can.

Republicans oppose creation of a $30 billion program to expand credit to small business. GOP opposition isn’t helpful when many small businesses can’t get the credit they need.

The survey raises two questions: What will it take to restore small biz confidence? Are the politicians listening?

NFIB survey results.