Economic Confidence Remains Flat among Small Business Owners

“Even the anticipation of a massive federal stimulus package couldn’t move the needle of economic confidence any higher for small business owners this month,” said Ryan Scully, director of Discover's business credit card. “More than half of small business owners plan to decrease spending on business development in the next six months, which matches the low point in this category set in November 2008.”

February Findings:

• 51 percent of owners say they plan to decrease spending on business development over the next six months, up from 46 percent in January; as 21 percent plan an increase; 25 percent see no change; and 3 percent aren’t sure.
• 19 percent of owners see conditions for their businesses improving, up from 17 percent who felt the same in January; while 54 percent see conditions getting worse, also an increase from January; 22 percent say conditions are the same; and 6 percent aren’t sure.
• 64 percent rate the economy as poor this month, up from 61 percent in January; 26 percent rate it fair and 10 percent rate it excellent or good.
• 12 percent feel the economic conditions in the U.S. are getting better, up from 8 percent in January. The number of owners who believe the U.S. economy is getting worse remains unchanged from January at 69 percent; as 14 percent see it staying the same; and 5 percent aren’t sure.
• The number of owners who say they have experienced temporary cash flow issues in the past 90 days rose to 42 percent in February, up from 38 percent in January.

This month’s Watch also indicates that experience makes a difference in the economic confidence of small business owners. The Watch’s confidence index for owners who have only been in business for the last two years is a dismal 50.5 in February, compared to those who have been in business six to 10 years, whose confidence score is 84.8.

When asked about the American Recovery and Reinvestment Act, 70 percent of small business owners say they are not aware of any provisions in the package that could help their businesses; 16 percent aren’t sure; and only 14 percent said they were aware of elements that could help their businesses.

“It's still early to sort out the details of the package, but indications are that small business owners aren't expecting much help," Scully said.