NFIB

Ohio Economic Outlook Shows Continued Opportunity for Small Business
06/01/2005

CONTACT: Mike Diegel for NFIB, (202) 669-7106
or Wendy Sept for Visa USA, (415) 318-4037

Strong Growth Seen for U.S. Small Businesses According to New Research; Ohio and Midwest Trailing But Solid

William Dunkelberg, NFIB chief economist; Richard Vedder, distinguished professor of economics, Ohio University; Wayne Best, senior vice president, business and economic analysis, Visa USA; John Fortney, Ohio News Network anchor and panel moderator at the Small-Business Economic Insights Series.

OHIO -- The National Federation of Independent Business and Visa USA, two of the nation’s leading small-business advocates, today released new economic and payment card research forecasting continued positive growth for small businesses throughout the U.S. through the coming summer months. But while small-business growth across the nation is expected to remain solid, the research also shows that Ohio and the Midwest will trail other regions of the country.

The findings were released at the first-of-its-kind Small-Business Economic Insights Series, which focused on economic factors impacting small-business activities and business planning. The event is part of NFIB and Visa’s shared commitment to delivering unique insights and programs to small businesses, in recognition of their critical role to the U.S. economy. Other events are planned for New York and California later this year. 

Through the NFIB’s Small-Business Conditions^SMreport and Visa’s SpendTrak report, a snapshot of national and regional card spending by consumers, small-business owners received an economic picture that married larger economic conditions with spending trends on Visa cards. Among the findings:

• Small-business growth across the nation is driven by consumer spending fueled by low interest rates and housing appreciation, which is putting more discretionary dollars back into consumers’ wallets.
• In the Midwest, however, consumer spending – the engine that drives growth for many small businesses – lags behind national figures, reflecting the area’s lower median income, slower population growth, slower home equity appreciation and consumer retail spending. 

According to NFIB’s Small-Business Conditions^SMcovering 26 states:

• Small businesses across the nation expressed a high level of optimism – 61 percent of small-business leaders polled say they are optimistic about prospects for their business in the next three months. Small-business owners in Ohio are more cautious. Only 23 percent of Ohio small-business owners polled in May agreed that business conditions for their enterprise are “good.” This represents a drop from 34 percent who expressed this belief in April. 
• However, small business in Ohio is on solid ground with the NFIB research also indicating that 51 percent of small-business owners see the outlook for business over the next three months as good based on factors such as sales prospects, greater productivity and seasonality. 

Visa’s payment card data shows retail spending in the region continues to gain momentum, but still trails the national average. The data covers spending on Visa-branded payment cards from Jan. 1 through May 15, 2005.

• Strong consumer spending continues throughout the U.S. with 17.7 percent growth compared to the same time period last year, while consumer spending in the Midwest grew 13.3 percent.
• Nationally and in the Midwest, consumer spending on Visa cards within travel and entertainment categories continues to be strong, partly fueled by the continued growth of card acceptance at quick service restaurants.
• Card spending in retail sectors shows a disparity with retail spending in the Midwest lagging behind the rest of the nation by 5 percent.

Based on the NFIB Small-Business Conditions^SM report and Visa SpendTrak report, the national economy continues to show strength with the Midwest lagging. Consumers are supporting this finding through their strong discretionary spending across the country. As small businesses plan for the summer season, it appears that consumers may continue to spend in several areas such as travel and entertainment, home furnishings and at discount stores. In the Midwest, where the economy is solid but slightly behind the other regions, small businesses can plan for stable growth but also need to keep an eye on financial management from cash flow efficiencies to inventory management.

“This data shows the complex marketplace dynamics small businesses in Ohio and throughout the U.S. navigate every day,” said Elizabeth Buse, executive vice president, product development and management at Visa USA. “Through events like the Small-Business Economic Insights Series, Visa will better understand the current issues facing small businesses that are key to continuing to deliver products and services that help small businesses maximize their cash flow and profitability.”

The growth of small businesses nationwide and throughout Ohio is also being fueled by smart choices small-business owners have made on the financial front, taking advantage of lower interest rates to restructure their finances to drive growth while managing their resources with increasing focus on efficiencies.

“Critical to small-business vitality is taking advantage of the powerful financial and resource management opportunities that exist today,” said Jack Faris, NFIB’s president and CEO. “Smart small companies are looking at restructuring of debt to lock in lower interest rates, keeping lean inventories and looking for ways to enhance their value proposition to customers as the basis for competing more effectively.”

At today’s event, 200 Ohio-based small-business owners, dignitaries and opinion leaders gathered to discuss economic trends and issues facing small businesses.  Former presidential candidate and publisher Steve Forbes gave the keynote address and a panel of respected economists including NFIB chief economist Dr. William Dunkelberg, Ohio University Distinguished Professor of Economics Dr. Richard Vedder, and Visa USA senior vice president of business and economic analysis Wayne Best presented insights on business outlook and consumer spending. 

As the nation’s largest small-business advocacy group, the NFIB is continually monitoring economic conditions impacting, as well as the attitudes of its 600,000 small-business members through its ongoing quarterly Economic Trends Study and recently launched Small-Business Conditions^SM reports.

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About National Federation of Independent Business
The National Federation of Independent Business is the nation’s largest small-business advocacy group. A nonprofit, nonpartisan organization founded in 1943, NFIB represents the consensus views of its 600,000 members in Washington, D.C., and all 50 state capitals. More information is available online at www.NFIB.com/newsroom.

About Visa USA
Visa USA is the nation's leading payment brand and largest payment system, enabling banks to provide their consumers and business customers with a wide variety of payment alternatives tailored to meet their evolving needs. Visa USA is committed to increasing the choice, convenience, acceptance, and security of Visa payments for all stakeholders in the payments systems – Members, cardholders and merchants. Through its 14,000 Member financial institutions, more than 463 million Visa-branded cards have been issued to cardholders in the United States. Last year, U.S.-based financial institutions relied on Visa's processing system, VisaNet, to facilitate $1.3 trillion in transactions with virtually 100 percent reliability.

Worldwide, cardholders in over 150 countries carry more than 1 billion Visa-branded cards, accounting for more than $3 trillion in annual transaction volume.

Visa offers a trusted, reliable and convenient way to access and mobilize financial resources – anytime, anywhere, anyway.