Publication: Discover Small Business Watch Published Date: 8/30/2010
Discover: Small Business Confidence Plummets in August Monday, August 30, 2010 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. In August, 62% of small business owners said the economy is getting worse and a record 55% of small business owners expect economic conditions for their businesses to be unfavorable in the next six months, up 10 percentage points from July. Those indicators led the drop in confidence from 83 on the index in July to 73 in August. 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. "There's growing concern that the economy is stuck in neutral, or even sliding, and small business owners definitely reflected that sentiment this month," said Ryan Scully, director of Discover's business card. "With the economy seemingly unable to show sustained growth, and small businesses not expanding to create jobs, it's no wonder that confidence is down." 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. In July, the Watch reported that 75% of small business owners expected a second recession to occur before the country sees a full recovery. Another indicator that dropped to its lowest point ever is that only 17% of small business owners said they would increase business development spending in the next six months, down from 28% in July; 52% said they would decrease spending, up from 45% in July; and 29% don't plan any changes. On the job front, 78% of small businesses have no plans to do any hiring. When asked about hiring over the next few months, 72% of business owners had no plans to add or subtract jobs, 20% said they were laying off workers and 6% planned to do some hiring. The percentage of small business owners planning layoffs is the lowest in the history of the Watch. Other August Confidence Indicators:
53% of small business owners are experiencing cash flow issues, up from 47% in July; 43% said they are not; and 4% aren't sure. 55% of small business owners expect economic conditions for their businesses to get worse in the next six months, while 20% expect them to stay the same, and 21% think things will get better. 62% of small business owners rate the current state of the U.S. economy as poor, up from 58%, in July; while 28% it fair; 6% rate it good; and 3% rate it excellent. 62% of small business owners say the economy is getting worse, up from 57% last month; 24% see it getting better; and 12% said it's staying the same. The Discover Small Business Watch is a monthly index measuring the relative economic confidence of U.S. small business owners who have less than five employees, a segment that consists of 22 million businesses producing more than a trillion dollars in annual receipts. The Watch is based on a national random survey of 750 small business owners.