Tags: NFIB | optimism | business | Obama

NFIB: Falling Business Optimism Reflects Dismay With Obama

By    |   Wednesday, 11 February 2015 09:34 AM

Small-business owners are less optimistic about the U.S. economy as the euphoria about the Republican congressional victory fades, according to an industry association.

The National Federation of Independent Business said its Small Business Optimism Index fell 2.5 points to 97.9 in January from the prior month. The measurement had risen in November and December to more than 100, the highest in eight years.

Last month’s decline came with the realization that the Republican gains didn’t necessarily herald a new era of entrepreneur-friendly policies from President Barack Obama, according to the business lobbying group.

“As the reality that President Obama still holds a lot of power sank in, perhaps small business owners’ attitudes fell back a bit,” Bill Dunkelberg, chief economist at the NFIB, said in a statement. “That’s one way to explain the swings in these numbers in recent months.”

Survey respondents cited “taxes” or “government regulations and red tape” as their biggest problems as business owners.

Regulation interference and taxes trump the list of concerns for small businesses while inflation risks and credit availability and costs are at the bottom,” Dunkelberg said in the statement. “Only a net three percent of owners reported raising average selling prices.”

Another reason for the decline in optimism may be the way the NFIB conducts its survey, according to one Wall Street economist.

“The NFIB survey process uses a large survey panel once a quarter (usually somewhere between 1,500 and 2,000 responses) and a smaller one in the subsequent two months (usually 600 to 800 responses),” Stephen Stanley, chief economist at Amherst Pierpont Securities, said in a report obtained by MoneyNews. “The months with a smaller panel are subject to much more noise, exactly as one would expect.”

‘Death of Entrepreneurship’

The decline in small-business optimism is part of a broader trend in the “death of entrepreneurship” in the U.S., said Pater Tenebrarum, a financial analyst who writes the “Acting Man” financial blog.

“There are more businesses dying than are created in the U.S. economy since 2008, so the information provided by NIFB comes from a shrinking base,” he said in a blog post. “The plunge in net new business formation certainly belies the stock market’s exuberance.”

He cited Census Bureau data that show business startups have declined steadily since the 1970s, while business closings have risen since 2007, a year after the U.S. housing bubble began to burst. Since then, the Federal Reserve cut interest rates to record lows and pumped trillions of dollars into the U.S. economy with quantitative easing measures.

“This decline in entrepreneurship is quite worrisome and in our opinion indicative of the phony nature of the echo bubble created by the Fed’s massive money printing since the 2008 crisis,” Tenebrarum said.

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Small business owners are less optimistic about the U.S. economy as the euphoria about the Republican congressional victory fades, according to an industry association.
NFIB, optimism, business, Obama
Wednesday, 11 February 2015 09:34 AM
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