Small Business Optimism Increases in 2012, But Barely

According to survey results recently published by the National Federation of Independent Business (NFIB), small business owners are slightly more optimistic about their futures than they were at the beginning of the year, but not by much. The NFIB’s Optimism Index of October 2012 (containing 2,029 responses from a random sample of nearly 11,000 small businesses) continues to average out in a recession level range over much of the last three years. The authors of the report made particular note to the high percentage of owners who report uncertainty as to whether the general business climate will be better or worse six months from now. As the authors accurately state, “[n]ot knowing the direction of the economy will always have a dampening impact on spending and hiring.”

For me, the most disconcerting survey results concerns that of earnings trends. Downward pressure on earnings continues almost unabated even after the so-called recovery began three years ago, and the NFIB survey reveals that small business owners expect this negative trend to continue. Without a return to earnings growth, small business owners will lack a ready source of capital with which to invest in new equipment and grow their businesses.

You can review and download the entire NFIB Economic Trends November 2012 report by clicking on this link: