Survey: Small business optimism falls to five-year low

Survey results released Tuesday show the index score dropped in April to 48, a 35-point drop from the last survey in January, representing the largest quarterly decline to date. The score also is 66 points lower than the index’s highest score on record of 114, reported in December 2006.

The index score is the sum of current and future expectations of small business owners for six key measures: financial situation, cash flow, revenues, capital allocation, job hiring and credit availability. An index score of zero indicates that an equal number of respondents are optimistic and pessimistic about their companies’ situations.

The score for current conditions was 18, down 20 points from January, according to the report. Future expectations scored 30, a 15-point drop from the previous quarter. The most significant shifts in attitude were in small business owners’ present revenue situations and in their future expectations for cash flow and financial situations.

“The nearly 50 percent drop in the index clearly reflects the intensified financial pressures small business owners have felt over the last three months,” Wells Fargo Senior Economist Scott Anderson said in the report. “However, as consumers begin to receive – and spend – their economic stimulus checks, this should soon begin easing the blow to small businesses in the third quarter.”

Despite falling optimism, 86 percent of survey respondents said they are satisfied being small business owners, and 94 percent said they feel successful, the report said. Those numbers were relatively unchanged from the previous quarter.

For the survey, 600 small business owners nationwide were interviewed April 2–16.[[In-content Ad]]