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Small Business Optimism Down Last Month

Date: March 12, 2014

Harsh Winter Weather Seen As Culprit

The National Federation of Independent Business reported on Tuesday that its Small Business Optimism Index fell to 91.4 in February from 94.1 in January. That matches other recent economic reporting, which suggested that the harsh winter that had enveloped much of the nation had taken a toll on the nation’s economy. However, the report showed that even areas of the country not impacted by the weather showed weakness.

NFIB Chief Economist Bill Dunkelberg said of the index, “Uncertainty is a major cause of the Index’s dip. Lacking any progress in Washington and facing continued unknowns with the healthcare law, the EPA, the minimum wage, tax reform and more, it is no surprise that the Small Business Optimism Index fell, reversing a few months of modest gains. As long as uncertainty remains high, owners will remain cautious when it comes to increasing inventory. Business owners aren’t going to bet their money on a future they cannot see clearly.” He added that the “plunge in expectations for improvements in real sales in the coming months and for business conditions 6 months from now, show that we shouldn’t expect blue skies soon.”

What It Means:

The NFIB data reinforces the general perception that the economy hit a rough patch this winter. The end of winter will show in coming months whether this was due to the weather, a broader array of problems, or both. Despite the pessimism, economists surveyed by Bloomberg still expect the economy to grow at a 2.9% rate for all of 2014, then accelerate some in the coming years.

Further Reading:

The NFIB report is posted online, while other reports and analysis of the data can be found in the Wall Street Journal, Investors Business Daily, Bloomberg BusinessWeek, and CBS News.

This news article is intended to keep small business owners apprised of current events that may affect them. It does not necessarily reflect NFIB’s policy position on such issues.

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