Small Business Confidence Shrinks Over Economic Fears

Published Wed, Apr 11th, 2012   Wall Street Daily Research

Small businesses – a key driver of employment – are becoming more pessimistic about the economy and are planning fewer new hires, according to a new survey from The National Federation of Independent Businesses (NFIB). It found that small business confidence in March fell for the first time in six months.

But in discussing the slip in confidence, the NFIB’s Chief Economist, Bill Dunkelberg, reveals:

“I think the thing that happened was that nothing happened. That is, we didn’t really resolve the uncertainty. Everything is kind of quiet in Europe and yet I don’t think we really believe that that situation is straightened out. Then, of course, we keep seeing our debt piling up.”

That broad lack of confidence has borrowers backing away from new debt, too, according to the Thomson Reuters PayNet Small Business Lending Index. It shows that lending to small businesses has recently slowed – behavior that may indicate further economic distress, says PayNet President, Bill Phelan:

“The small business lending index is a really good leading economic indicator of future GDP. And as small business goes, so goes GDP in the U.S.”