Watching the Economy by Clint Burdett CMC® FIMC

Small Businesses Ready to Expand But Holding Back

March 16, 2013

NFIB March 2013 Report on Small Business Economic Conditions suggests small businesses ready to expand but holding back.

The NFIB Small Business Optimism Index increased 1.9 points in February to 90.8. ... The direction of February's change is positive, but not indicative of a surge in confidence among small-business owners. Of the ten Index components, one fell, one remained unchanged and eight improved. Most notably, the gains in capital spending and inventory investment plans were large, but by historical standards the levels remain very low.

"While the Fortune 500 are enjoying record high earnings, Main Street earnings remain depressed. Far more firms report sales down quarter over quarter than up. Washington is manufacturing one crisis after another-the debt ceiling, the fiscal cliff and the sequester. Spreading fear and instability are certainly not a strategy to encourage investment and entrepreneurship. Three-quarters of small-business owners think that business conditions will be the same or worse in six months. The Index gained almost 2 points last month; that was good news. But, until owners' forecast for the economy improves substantially, there will be little boost to hiring and spending from the small business half of the economy." -- NFIB chief economist Bill Dunkelberg