The National Federation of Independent Business survey results for February 2011 provide mixed signs about the economic recovery. Although the NFIB Index of Small Business Optimism posted a slight gain in January, the magnitude of this increase was not significant.
On a positive note, the 4th quarter GDP recorded growth of 3.2% and consumer spending was up 4.4%. While the upward movement of these indicators is good news, it does not reflect the considerable challenges facing many small business owners.
Key findings from the February survey were:
• Sales were improved.
• The outlook for sales is more optimistic.
• Inventories are higher, a sign of better things to come.
• Firms have become more confident about raising prices.
• Price increases must be dealt with delicately in the near-term.
• Fears of deflation have eased.
• The outlook for profits is brighter; however, small businesses are not enjoying the same growth as large businesses.
• Many small businesses are not in a strong enough position to support moderate hiring and capital spending.
• Almost all firms felt their credit needs were met or that they were not interested in borrowing.
Finally, survey respondents identified their single most important problem (see table below). As has been the case throughout the recession, the lack of sales, i.e. weak consumer activity, continues to be at the top of the list. Taxes and government red tape follow in the second and third position.
The lack of growth of our country’s small businesses is one reason why this recovery has been so slow and painful. Looking ahead, significant growth of the country’s small businesses is necessary for the U.S. to reach pre-recession employment levels.
To download the full report go to http://www.nfib.com/research-foundation .
©Copyright 2011 by CBER.