News Column

Survey: Optimism Falters for Small-business Owners

April 27, 2011

Cara Baruzzi

Small business

Small-business owners are feeling less optimistic about their companies' conditions this quarter than they were last quarter, according to a survey released Tuesday.

The latest Wells Fargo/Gallup Small Business Index survey garnered a reading of zero, indicating respondents are neutral in their views of business conditions. For the survey, 602 smallbusiness owners in all 50 states were polled April 4-8.

This month's reading marked a decrease from the first-quarter survey in January, when the index garnered a reading of 12.

Any positive reading indicates optimism, up to the best possible reading of 400, while a negative reading signifies pessimism, to the most negative score possible of minus 400.

When asked how they feel their companies will fare over the next year, 58 percent said they expect their firms' financial situation to be very or somewhat good, down from 65 percent who felt that way in January.

Also, 22 percent said this month they expect their companies' financial situation to be very or somewhat poor over the next year, an increase from the 17 percent who felt that way in January.

"Weaker U.S. consumer spending in the first quarter, along with a spike in energy prices, is likely behind much of the slide in small-business optimism since January," Scott Anderson, senior economist at Wells Fargo, said in a statement.

But while some pessimism lingers, sentiment has improved from low points reached amid the recession. And this month's reading was better than the minus 11 the index garnered in April 2010.

"On the bright side, for the second quarter, optimism remains above the negative territory we experienced throughout 2009 and 2010," Anderson said.

This month's overall index score is a combination of two surveys, one gauging respondents' views on the past 12 months and another assessing their attitude about the coming 12 months.

The Present Situation Index, which examines the last 12 months, got a reading of -14, while the Future Expectations Index got a reading of 14. Together, they produced the neutral reading of zero.

The poll asks business owners how their companies are faring in six areas: financial situation, cash flow, revenues, capital spending allocation, job hiring and credit availability.

Source: Copyright (c) 2011, New Haven Register, Conn.

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