The NFIB Small Business Optimism
Index took a nose dive in November to 5.6 points, marking one of its
largest-ever drops, according to a report by the National Federation
of Independent Businesses (NFIB).
This was the largest one-month drop since 1987 on a negative
response to last month' s presidential election and a dramatic drop
in owner confidence. States ravaged by Hurricane Sandy were excluded
from the survey, with the election being the primary cause for the
index' s drop.
"Something bad happened in November-and based on the NFIB survey
data, it wasn' t merely Hurricane Sandy. The storm had a significant
impact on the economy, no doubt, but it is very clear that a
stunning number of owners who expect worse business conditions in
six months had far more to do with the decline in small-business
confidence," said NFIB chief economist Bill Dunkelberg.
"Nearly half of owners are now certain that things will be worse
next year than they are now. Washington does not have the needs of
small business in mind. Between the looming 'fiscal cliff,' the
promise of higher health-care costs and the endless onslaught of new
regulations, owners have found themselves in a state of pessimism,"
he said.
"We are forced to ask: is this the new normal?" he asked.
The most significant factor impacting the decline in optimism is
the expectation that future business conditions will be worse than
current ones, the report found.
The net percent of owners expecting better business conditions in
six months fell 37 points to a net negative 35 percent. In October,
the percent of owners who said they were uncertain as to whether
business conditions would be better or worse in six months hit a
record low of 23 percent. Many of those who were uncertain about the
economy in October became decidedly negative in November.
Forty-nine percent of the owners now expect business conditions
to be worse in six months, while 11 percent still express
uncertainty about the future.
In the history of the monthly index, only seven readings were
lower, all but one in the last few months of 2008 and early 2009,
the depths of the last recession. Prior to 1986 when the survey was
conducted on a quarterly basis, there were just two readings lower.
