Small-business confidence rose 0.8 points in September, which put an end to the six-month decline, according to the National Federation of Independent Business' newest Index.
Despite the gain, NFIB's Chief Economist Bill Dunkelberg believes there is not much among the 10 Index components that can be considered "positive." While reports of owners anticipating real sales to increase were higher in September, they were still negative. Owners expecting improved business conditions in six months slightly grew, though this reading also remained negative.
"An increase in consumer spending would be the best imaginable stimulus right now, not gimmicky Washington policies," Dunkelberg says. "Promising temporary tax cuts financed by permanent income tax increases will not help many small-business owners who pay taxes based on personal — not corporate — tax rates. The key to economic recovery is restoring the confidence of consumers; only then will small businesses begin to see the sales they need to expand.
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"If consumers fear the path we are on, then 'less is more' policies that reduce the size of government will increase confidence."
Based on the index, 28 percent of small-business owners say poor sales remains the largest business problem, which has been the case for the last three years. The net percent of owners anticipating improved business conditions in six months is a negative 22 percent. Although that is up 4 points from August, it is 32 percentage points lower than January.
The index also finds that the seasonally adjusted net percent of all owners reporting higher nominal sales over the past three months fell 1 percentage point to a net negative 10 percent. More firms report sales trending down, rather than up. Regardless of it being negative, this is still one of the top readings in over 40 months. On unadjusted metrics, 25 percent of all owners report higher sales while 29 percent reported lower sales.
Small-business sales are also forecasted to remain weak, the index reveals. In fact, the net percent of owners anticipating higher real sales gained 6 points from August, totaling a net negative 6 percent of all owners at a seasonally adjusted rate, which is still 19 points under January's reading. Twenty-two percent of owners expect improvement over the next three months, for a gain of 1 point, and 36 percent expect declines, for a gain of 2 points. With these figures, it seems owners have lost confidence in the economy and possibly even in the government's ability to help in the recovery.
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