10/10/2001
NFIB Chief Economist Bill Dunkelberg today told Congress that small-business optimism plummeted after the Sept. 11 terrorist attacks, putting a hold on hiring and expansion plans. He also outlined steps that may be taken by Congress to help stimulate further economic growth. In his testimony before the U.S. House Small Business Committee, Dunkelberg reviewed the results of a special edition of NFIB's Small Business Economic Trends report. The survey of small-business owners revealed that many turned pessimistic about future sales after Sept. 11. That pessimism caused a sharp drop in plans to hire new workers and invest in capital spending.
"The outlook for real sales growth and for growth in the economy were seriously damaged," Dunkelberg said. "Related to this loss of confidence and increase in uncertainty, plans to increase employment plunged and capital spending plans reached historically low levels. 'Normalcy' will overcome this eventually, but it is not clear how long this will take. Certainly if the war stays overseas, this process will occur at a much faster rate than would be the case if there are more domestic terrorist attacks." Dunkelberg also provided the economic basis for NFIB's policy recommendations for small-business recovery after the attacks. NFIB has endorsed President Bush's economic stimulus package. President Bush's plan would accelerate the across-the-board income-tax relief that began being phased in earlier this year. At least 85 percent of small-business owners benefit from income-tax relief, which would provide a broad base for economic recovery. The president's plan also calls for enhanced expensing of capital expenditures and the elimination of the alternative minimum tax, effectively removing two current roadblocks to new investment.
"Small business is the major job generator for the economy," Dunkelberg said. "Tax cuts that infuse money into the small-business sector would certainly make it possible for small business to retain more employees and to support the hiring of new employees. Such provisions as expensing would provide small and growing firms with the funds to keep their firms running and growing, creating new jobs. Or, the cost of labor could be reduced by lowering the social insurance taxes paid by firms, and by workers as well. These types of reductions can have an immediate impact on the economy and jobs."
| Change (Sept. 1 to 11 vs. Sept. 12 to 27) | |
| Hiring Plans |  9 |
| Job Openings | 5 |
| Capital Spending Plans | 6 |
| Inventory Investment Plans | 4 |
| Inventory Too Low |  1 |
| Expected Credit Conditions |  0 |
| Now A Good Time To Expand | 5 |
| Better Bus. Cond. In 6 Mo | 11 |
| Expected Real Sales | 17 |
| Earnings Higher | 1 |
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| |
| SMALL BUSINESS OPTIMISM INDEX | 5 |
| Credit Easier Or Harder | 1 |
| Sales Higher Prior 3 Months | 1 |
| Raised Wages | 1 |
| Inventories Higher Now | 1 |
| Selling Prices Higher | 2 |
CONTACT: Michelle Dimarob, (202) 554-9000
