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Small Business Watch
August 2010
Small Business Confidence Plummets
Small business owners' confidence in the economy soured significantly from July to August in the largest one-month decline since November 2009, according to the Discover Small Business Watch. Business owners expressed a negative outlook for the economy in general and skepticism that economic conditions would get better for their businesses in the next six months. The Watch index dropped to 73.0 in August from 83.0 in July. August marks the third straight monthly decline in the index, which is the lowest it has been in 18 months on the 4-year-old index.
August Indicators:
- 62 percent of small business owners rate the current state of the U.S. economy as poor, up from 58 percent, in July; while 28 percent it fair; 6 percent rate it good; and 3 percent rate it excellent.
- 55 percent of small business owners expect economic conditions for their businesses to get worse in the next six months, while 20 percent expect them to stay the same, and 21 percent think things will get better.
- Confidence was at a record low among small business owners who sell directly to consumers. Those small businesses slid 17.4 points since last month to a record-low 65.5 points on the index, compared to business-to-business operators who marked 79 on the index in August, down only 2.2 points from July.
- An indicator that dropped to its lowest point ever is that only 17 percent of small business owners said they would increase business development spending in the next six months, down from 28 percent in July; 52 percent said they would decrease spending, up from 45 percent in July; and 29 percent don't plan any changes.
- On the job front, 78 percent of small businesses have no plans to do any hiring. When asked about hiring over the next few months, 72 percent of business owners had no plans to add or subtract jobs, 20 percent said they were laying off workers and 6 percent planned to do some hiring. The percentage of small business owners planning layoffs is the lowest in the history of the Watch.
- 53 percent of small business owners are experiencing cash flow issues, up from 47 percent in July; 43 percent said they are not; and 4 percent aren't sure.
- 62 percent of small business owners say the economy is getting worse, up from 57 percent last month; 24 percent see it getting better; and 12 percent said it's staying the same.
