Small-Business Owners Are More Optimistic

Small-business owners are more optimistic than at any other time since 2007, as their outlook for sales and economic conditions jumped this month, according to a private survey released Tuesday.

The optimism index from the National Federation of Independent Business rose to 98.1, up two points from November, the group said.

About 5½ years after the recession ended, the index, which is one of the economic indicators the Federal Reserve monitors, finally has reached its 42-year average.

“Unfortunately, the index did not sprint past the average, which is typical of a strong recovery before settling back down,” said Bill Dunkelberg, the group’s chief economist. “Instead, it’s been a slow slog just to reach this point.”

The increase came from jumps in two of the 10 measures the index tracks.

The biggest move was in expectations of small-business owners for the economy during the next six months.

That index component, based on the difference between the percentage of owners expecting improvement minus those expecting conditions to worsen, rose 16 points from October.

The other area of significant improvement was in sales, with that index component up 5 points.

The increased optimism “isn’t translating yet into a flurry of job creation or capital investment among small-business owners,” Dunkelberg said, but he called it a positive sign. “It’s a little early to declare a breakout.

“This performance will have to be consolidated by several more positive readings before owners are confident to hire more employees and expand their business,” he said.

This article appeared in print in the December 10th, 2014 edition of Hamodia.