Small Business Confidence in the Economy Erodes

By Douglas A. McIntyre Updated Jan 6, 2:40AM EST · Published Sep 10, 7:15AM EDT

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Small Business Confidence in the Economy Erodes — © PeopleImages / Getty Images

It appears that worry about the economy has started to catch up to small businesses owners. One of the primary barometers of their sentiment was released Tuesday, and the results were troubling, although not completely negative.

The National Federation of Independent Business (NFIB) Small Business Optimism Index for August showed a drop of 1.6 points from the month before. At 103.1, the index showed that sentiment is still better than normal. However, there were cracks in the figures.

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NFIB President and CEO Juanita D. Duggan said:

In spite of the success we continue to see on Main Street, the manic predictions of recession are having a psychological effect and creating uncertainty for small business owners throughout the country. Small business owners continue to invest, grow, and hire at historically high levels, and we see no indication of a coming recession.

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Though small business owners have become more concerned about the future, the reasons are not entirely negative: “The Uncertainty Index rose four points in August, suggesting that small business owners are reluctant to make major spending commitments. In fact, the main impediment to more growth is the record level of no qualified workers.” Capital outlays and purchase of equipment stayed strong.

The number of owners who believe they can raise prices fell five points to 17%. The reasons for this were not entirely clear. The number of owners who expect to raise compensation tailed off as well.

Finally, the problems small business owners have is a bit of good news. “As seen in NFIB’s August Jobs Report, a record 27 percent of owners reported finding qualified workers is their No. 1 business problem.”
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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.