Confidence Index Remains Flat as Small Business Owners Dig In RECESSION: Half of Small Business Owners Say Economic RecoveryMore Than a Year Away; 53% Say Small Businesses Will Lead U.S. Recovery; 61%of Owners Likely to Tap Personal Assets to Stay Afloa
Oct. 26, 2009 (Business Wire) -- The economic confidence of American small business owners remains largely unchanged in October, rising less than 1 point from the previous month on the Discover® Small Business WatchSM index. The Watch rose from 87.7 in September to 88.5 in October, with only one key measurement – business investment – showing any significant change.
“Small business owners aren’t showing any new optimism in the economy,” said Ryan Scully, director of Discover's business credit card. “Half of them think it will take more than 12 months before most people feel the economy has stabilized, and two out of three are expecting to dig into their own pockets to stay afloat.”
One of the only key measurements to show any significant change from September is the likelihood of investing in business development in the next six months in areas such as advertising and capital expenditures. On the positive side, the number of those who said they plan to decrease spending dropped from 50 percent in September to 44 percent in October. However, the number of those planning no changes jumped from 22 percent to 32 percent. Those who are planning to increase spending dropped from 25 percent to 23 percent.
“This could indicate that any significant expansion and investment in the small business sector isn’t likely to arrive for quite a while,” Scully said. “They’re holding on to their money.”
October Highlights:
- 55 percent of small business owners rate the economy as poor, up from 53 percent in September and 48 percent in August; 36 percent rate it as fair and only 8 percent say it is excellent or good.
- 44 percent of small business owners think the economy is getting worse, down from 46 percent in September; 35 percent of owners say the economy is getting better, up from 33 percent in September.
- 44 percent of owners say they have experienced cash flow issues in the past 90 days, down from 46 percent in September.
- 29 percent of small business owners see economic conditions for their businesses improving, unchanged from September, while 43 percent see their own conditions getting worse, down two percentage points over last month.
Majority of Owners Say Small Businesses Will Lead U.S. Recovery
When asked whether small businesses will lead the U.S. economy to recovery or trail it, 53 percent say the sector will be out front, 29 percent say following the recovery is more likely, and 18 percent aren’t sure.
