Small Business Optimistic Despite Weakening Economy

In Wells Fargo's most recent Small Business Index it was found that small business owners continue to be optimistic despite the weakening economy.

The index fell 4 points to 110 from its record high 114 in the fourth quarter of 2006. 90% of small businesses surveyed said they are satisfied being an entrepreneur and 78% said they would do it all over again.

The index measures 6 variables - financial situation, cash flow, revenues, capital allocation, job hiring and credit availability for both current and future expectations.

According to Wells Fargo senior economist Scott Anderson, "The slight drop in small business owner confidence was evident in both the present situation and future expectations components of the index, suggesting weaker current and future conditions than the last quarter of 2006. The combined pressures of high gas prices, resetting mortgage rates, and moderating home price growth continue to put strains on household balance sheets."

Small Business Optimism Is Rising

Optimism among small-business owners rebounded in January from a four-month low, as more companies planned to hire and buy equipment, a private survey found.

The National Federation of Independent Business' index of business optimism increased 2.4 points during the month, to 98.9, the Washington-based advocacy group said.

Some 30 percent of small-business owners said they expect to purchase equipment during the next few months, compared with 26 percent who said so in December. The survey results are consistent with economic growth of around 2.8 percent in the current quarter, the group said.

Twenty-three percent of small businesses plan to create more jobs in the next three months, up from 14 percent in December.

Seven of the 10 index components in the survey rose last month.

Fifteen percent of small-businesses owners polled said they added workers in January, and more than a quarter reported unfilled job openings.