09/08/2005
CONTACT: Michael Diegel for NFIB, (202) 669-7106 or Ben Tanner for Visa USA, (212) 453-2301
New York small businesses see a positive sales picture
NEW YORK, Sept. 8, 2005–The National Federation of Independent Business and Visa USA, two of the nation’s leading small-business advocates, today released research findings providing a snapshot of the economic conditions facing, and outlook for, small businesses. Buoyed by strong consumer and business spending nationwide and in New York, small business growth remains strong.
The findings were released at the Small-Business Economic Insights Series, which explored economic factors impacting small-business’ activities and business planning. The series is part of NFIB and Visa’s shared commitment to deliver unique insights and programs to small businesses, in recognition of their critical role in the U.S. economy.
National conditions
Small-business owners attending today’s conference gained valuable insights regarding the economic outlook, including broader financial conditions and spending trends based on NFIB’s Small-Business ConditionsSM report, the Visa Commercial Consumption ExpenditureTM (CCE) Index – the first financial metric to standardize how business and government spending is tracked within the United States – and SpendTrak, a proprietary analysis of consumer spending patterns on Visa cards.
Among the findings in the 26 largest-economy states surveyed by NFIB:
- Almost half (46 percent) of small-business owners reported that sales were good.
- Nearly two-thirds (61 percent) said the outlook for the next three months is good.
“Small-business growth across the nation is still being driven largely by consumer spending fueled by continued low interest rates and housing appreciation,” said Jack Faris, president and chief executive, NFIB. “We can see from our survey results that small-business owners are becoming more optimistic and are looking forward to relatively good business conditions.”
Visa’s CCE and consumer spending data reinforce the optimism presented in NFIB’s survey results.
- Strong consumer spending continues throughout the United States, with spending on Visa-branded cards totaling $774 billion for the period Jan. 1, 2005 through Aug. 21, 2005, representing 14 percent growth compared to the same time period last year. Consumer spending on Visa cards in the Northeast region grew 10.3 percent.
- Nationally and in the Northeast, consumer spending on Visa cards continues to be strong. Discretionary spending, a key indicator of consumer confidence, remains robust in categories such as discount and drug stores. Department stores have rebounded, indicating that consumers feel confident about visiting these non-deep-discount retailers.
- Non-payroll spending by U.S. businesses and government agencies will continue a pattern of solid growth, increasing an estimated six percent in 2005 to $16.2 trillion, and expand further to reach more than $17.3 trillion by 2007, according to Visa’s CCE analysis. Small businesses continue to outpace growth of larger companies with the manufacturing, retail and wholesale trade sectors reflecting the largest share of small business segment spending.
“Strong business spending suggests that small businesses are confident, and are investing to grow their businesses and capitalize on continued opportunities,” said Wayne Best, senior vice president, business and economic analysis, Visa USA. “At the same time, American consumers feel confident and empowered to make purchases, as seen in their spending on discretionary items.”
Business conditions in New York and the Northeast
NFIB’s Small-Business ConditionsSM report revealed the following findings for New York and the Northeast:
- Nearly half (42 percent) of New York’s small-business owners say their sales are good – a significant increase from 31 percent expressing that sentiment in the previous quarter. A positive sales outlook was also provided by small-business owners in Massachusetts (48 percent), Pennsylvania (43 percent) and New Jersey (42 percent).
- Almost half (46 percent) of New York’s small-business owners made capital expenditures, as compared to eight percent of its neighboring states.
- More than a quarter (29 percent) of New York’s small-business owners described business conditions in their market area as “good,” up from 22 percent in June. New Jersey cited higher satisfaction with business conditions at 43 percent.
- Taxes (15 percent) and insurance (15 percent) tied as the “single most important business problem” for New York small business owners.
At today’s conference, New York-based small-business owners, dignitaries and opinion leaders gathered to discuss economic trends and issues facing small businesses. In a keynote address, David Bohigian, director of policy and strategic planning, U.S. Department of Commerce focused on small business growth in a global economy. He was followed by a panel discussion on the national and regional business outlook and consumer spending. Participating in the panel were William Dunkelberg, chief economist, NFIB; Edmund J. McMahon, senior fellow for Tax and Budgetary Studies, the Manhattan Institute; and Wayne Best, senior vice president, business and economic analysis, Visa USA.
# # #
About NFIB Economic Trends Study and Small-Business Conditions
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 ConditionsSM reports.
About Visa Commercial Consumption Expenditure
Visa’s Commercial Consumption Expenditure (CCE) index is the first financial metric to standardize how business and government spending is tracked within the United States. Created by a team of Visa research and economic experts, CCE draws on government data using methods similar to those used in calculating the Personal Consumption Expenditure (PCE) index, which annually monitors consumer-related spending. By using measures from the Bureau of Economic Analysis and the Census Bureau, CCE offers an unbiased and consistent way to monitor business expenditures within the U.S. consistent with Gross Domestic Product accounting.
CCE is comprised of four key data elements including intermediate inputs, wholesale and retail purchases, private fixed investment and government spending. The small-business spending forecast incorporates the broader CCE data set, as well as proprietary data provided by Global Insight.
About Visa SpendTrak
Visa SpendTrak provides insight into consumer spending behavior. Based on proprietary data, this report presents timely statistics based on approved authorizations of Visa-branded credit, debit and commercial cards in key market segments. Growth comparisons are to the same period from the prior year. Growth in Visa volume reflected in the SpendTrak report is the result of two major factors: increased spending by consumers and businesses; and the overall migration of spending from paper forms of payment (cash and checks) to electronic forms. Visa makes every effort to use reliable information in preparing this release, but Visa makes no representation that they are accurate or complete. Visa's predictions about the future performance of the economy and consumer spending are based on assumptions that may not be realized.
About National Federation of Independent Business
The National Federation of Independent Business (NFIB) 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 and all 50 state capitals. More information is available online at NFIB.com/newsroom.
About Visa Commercial Solutions
Visa offers small businesses, middle market companies, large corporations and government agencies trusted, reliable solutions that meet their many commercial payment needs – for virtually any purchase type, any situation or any business process. These capabilities help businesses and government agencies streamline operations, reduce overall costs and improve cash flow for better management of their payment processes. Visa’s commercial solutions offer the best way for businesses and the public sector to pay and be paid. For more information about Visa Business products and services, please visit visa.com/smallbusiness.
Note to editor: NFIB research fact sheet attached and Visa research fact sheet attached in the top right-hand corner (gray box links). This is tied to the data.
The Small-Business ConditionsSM reports are developed from surveys of small-business owners in 26 states. The surveys are designed to determine the condition of the small-business economy in each particular state. The surveys are conducted every three months and results are released on the first day of the month following completion. The text of the questions and the complete response set to the survey can be found at www.NFIB.com/research.
| New York Small-Business ConditionsSM | ||||||
| This chart shows the results from New York and its comparative standing among selected nearby states. | ||||||
| N.Y. | Conn. | Mass. | N.J. | Pa. | ||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 8/2005 | 12 | 6 | 11 | 11 | 10 |
| Prior qtr. | 0 | 7 | 15 | 11 | 20 | |
| Business conditions in market area | ||||||
| Net % "good" | 8/2005 | 29 | 29 | 41 | 43 | 30 |
| Prior qtr. | 22 | 39 | 33 | 38 | 30 | |
| Net % "improving" | 8/2005 | 9 | 7 | 6 | 7 | 1 |
| Prior qtr. | 0 | 8 | 12 | 13 | 0 | |
| Outlook for business | ||||||
| Net % "good" in next three months | 8/2005 | 53 | 57 | 62 | 62 | 52 |
| Prior qtr. | 47 | 60 | 60 | 57 | 53 | |
| Reason for optimism | ||||||
| % Sales prospects | 8/2005 | 47 | 47 | 45 | 42 | 41 |
| Prior qtr. | 48 | 47 | 41 | 39 | 37 | |
| % Lower costs | 8/2005 | 3 | 4 | 3 | 3 | 4 |
| Prior qtr. | 4 | 2 | 6 | 2 | 1 | |
| % Price increases | 8/2005 | 7 | 6 | 3 | 5 | 5 |
| Prior qtr. | 3 | 7 | 4 | 3 | 4 | |
| % Greater productivity | 8/2005 | 13 | 10 | 14 | 15 | 12 |
| Prior qtr. | 13 | 19 | 10 | 11 | 18 | |
| % Government policy | 8/2005 | 5 | 4 | 2 | 3 | 3 |
| Prior qtr. | 4 | 4 | 2 | 6 | 4 | |
| % Seasonal/Weather | 8/2005 | 7 | 5 | 12 | 10 | 9 |
| Prior qtr. | - | - | - | - | - | |
| Reason for pessimism | ||||||
| % Sales prospects | 8/2005 | IC* | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Cost increases | 8/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Pressure on selling prices | 8/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Lower productivity | 8/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| % Government policies | 8/2005 | IC | IC | IC | IC | IC |
| Prior qtr. | IC | IC | IC | IC | IC | |
| N.Y. | Conn. | Mass. | N.J. | Pa. | ||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 8/2005 | 42 | 38 | 48 | 42 | 43 |
| Prior qtr. | 31 | 47 | 39 | 34 | 35 | |
| Profits | ||||||
| Net % profits "good" | 8/2005 | 26 | 13 | 32 | 31 | 22 |
| Prior qtr. | 10 | 29 | 26 | 37 | 21 | |
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 8/2005 | 23 | 22 | 23 | 22 | 21 |
| Prior qtr. | 21 | 16 | 17 | 22 | 19 | |
| Per employee payroll cost | ||||||
| Net % "risen" | 8/2005 | 19 | 15 | 16 | 17 | 21 |
| Prior qtr. | 16 | 15 | 15 | 16 | 15 | |
| Employee cost pressures (greater) | ||||||
| % Wages | 8/2005 | 48 | 47 | 47 | 49 | 44 |
| Prior qtr. | 45 | 46 | 51 | 49 | 51 | |
| % Benefits | 8/2005 | 29 | 35 | 35 | 33 | 36 |
| Prior qtr. | 31 | 28 | 23 | 32 | 31 | |
| N.Y. | Conn. | Mass. | N.J. | Pa. | ||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 8/2005 | 46 | 41 | 41 | 46 | 38 |
| Prior qtr. | 41 | 41 | 42 | 38 | 43 | |
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 8/2005 | 46 | 41 | 41 | 41 | 38 |
| Prior qtr. | 40 | 39 | 41 | 37 | 42 | |
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 8/2005 | 43 | 43 | 38 | 40 | 38 |
| Prior qtr. | 35 | 34 | 35 | 34 | 40 | |
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 8/2005 | 55 | 58 | 52 | 53 | 50 |
| Prior qtr. | 45 | 47 | 51 | 51 | 52 | |
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 8/2005 | 32 | 31 | 40 | 35 | 37 |
| Prior qtr. | 35 | 46 | 36 | 40 | 43 | |
| % All credit needs not satisfied | 8/2005 | 10 | 10 | 5 | 6 | 4 |
| Prior qtr. | 6 | 3 | 7 | 5 | 4 | |
| % No credit needs | 8/2005 | 54 | 53 | 49 | 52 | 52 |
| Prior qtr. | 50 | 45 | 51 | 46 | 45 | |
| N.Y. | Conn. | Mass. | N.J. | Pa. | ||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 8/2005 | 55 | 58 | 55 | 50 | 59 |
| Prior qtr. | 54 | 52 | 50 | 50 | 59 | |
| Selling prices (last three months) | ||||||
| Net % increased | 8/2005 | 18 | 14 | 14 | 18 | 18 |
| Prior qtr. | 14 | 15 | 18 | 18 | 18 | |
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 8/2005 | 11 | 10 | 10 | 9 | 10 |
| Prior qtr. | 11 | 10 | 9 | 13 | 11 | |
| Single most important business problem | ||||||
| % Weak sales | 8/2005 | 11 | 9 | 9 | 9 | 9 |
| Prior qtr. | 11 | 14 | 13 | 12 | 13 | |
| % Taxes | 8/2005 | 15 | 16 | 8 | 10 | 15 |
| Prior qtr. | 11 | 12 | 10 | 9 | 11 | |
| % Employee quality/costs | 8/2005 | 7 | 7 | 11 | 8 | 7 |
| Prior qtr. | 8 | 9 | 9 | 8 | 10 | |
| % Insurance | 8/2005 | 15 | 17 | 19 | 21 | 18 |
| Prior qtr. | 16 | 19 | 17 | 20 | 19 | |
| % Big-business competition | 8/2005 | 13 | 14 | 13 | 15 | 14 |
| Prior qtr. | 14 | 11 | 14 | 13 | 13 | |
| % Inflation/Rising prices | 8/2005 | 10 | 12 | 15 | 13 | 13 |
| Prior qtr. | 10 | 12 | 11 | 10 | 13 | |
| % Credit availability/Interest rates | 8/2005 | 3 | 3 | 4 | 2 | 3 |
| Prior qtr. | 1 | 3 | 3 | 3 | 3 | |
| % Regulations/Red tape | 8/2005 | 8 | 8 | 6 | 9 | 7 |
| Prior qtr. | 7 | 7 | 7 | 8 | 7 | |
* Insufficient cases
| New York Quarterly Spotlight | |
| What is the PRIMARY reason for any cash flow problems in your business generally associated with? | |
| The need to make large investments and wait for sales | 7% |
| Unexpected variations in sales or costs | 10% |
| Seasonality | 14% |
| Weak sales | 13% |
| Difficulty collecting money owed you | 16% |
| Don't experience cash flow problems | 26% |
| Other | 3% |
| Don't know/refused | 12% |
| Total | 100% |
| Which is the ONE more important action you usually take to resolve a cash flow problem? Do you:? | |
| Draw on personal resources | 19% |
| Borrow | 12% |
| Adjust scheduled payments | 10% |
| Adjust scheduled purchases | 11% |
| Try harder to collect money owed you | 27% |
| Other | 4% |
| Don't know/refused | 17% |
| Total | 100% |
The Poll
NFIB’s New York Small-Business ConditionsSM is a telephone survey of a random sample of New York small employers regarding business conditions within the state. “Small employer” is defined here as employing between one and 250 people (not including the owner(s)) in a for-profit business. Each edition of the survey has a minimum of 350 respondents. The sampling error is ± 5 percentage points. Data are collected quarterly in the months of February, May, August and November, beginning in February 2005. The MRCGroup of Las Vegas conducts the survey for the NFIB Research Foundation.
The Sponsor
The NFIB Research Foundation is a 501 (c)(3) organization that provides policy-makers, media, educators, small-business owners and other interested parties empirically based information on small business and small-business owners. The Foundation is affiliated with the National Federation of Independent Business, the nation’s largest small- and independent-business advocacy organization, and is located in Washington, D.C.
