NFIB Small-Business Optimism Index Falls for the Fifth Month

August 9th, 2011
in econ_news

Econintersect:  The National Federation of Independent Business (NFIB) small business optimisim slide marginally in July 2011 for the fifth straight month.  But the interesting news for most is their partisan attack.

It is hard to think of anything that happened in July that would make owners more optimistic. The second quarter Gross Domestic Product (GDP) growth report was abysmal (1.3%) and Q1 was revised from 1.9% to 0.4%. Indeed, the government reported that the entire recession period was even worse that we thought. The decline in GDP was revised to -5.1%, one full point worse than previously estimated.

Follow up:

Congress did not come up with a budget plan by the time the month ended, and the likes of Paul Krugman (NYT July 30) continued highly partisan assaults on the Republicans. His claim that high tax rates were responsible for the surpluses in the late 1990s is pure political bunk (many Democrats claim this). I thought it was the outrageous levels of capital gains tax revenues from the DotCom bubble and the record employment levels that resulted from the Y2K/Telecom investment boom, along with a Republican controlled Congress that yielded the surpluses. Maybe the Administration can magically concoct another Y2K event in the calendar. Even small business capital spending hit record levels in that investment boom.

Mr. Krugman also blames people who want government spending curtailed for holding us hostage in raising the debt ceiling. More likely the reverse is true, it is those who will not consider curtailing the reach of government that will not agree to a deal. They are holding sensible people hostage to their view of a larger government at the expense of small business owners. There is no limit to the amount of private income Congress will spend on its pet project - mostly designed to keep them in elected office. The July survey anticipates slow growth for the remainder of the year, high unemployment rates, inflation rates that are too high and little progress on job creation. It seems for all the activity in Washington, D.C…they have done nothing but create a sizeable helping of anxiety, exactly what we don’t need.

The above table is a summary of the current levels of the components of the index.  0% level means they see see no change.  The index overall remains in negative territory.

Overall, it seems this NFIB survey is not optimistic about the future.

source: NFIB


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