Survey: Small-Business Optimism Down to New Low

Small-business owners' optimism recently dropped to its lowest level in the six years that the Wells Fargo/Gallup Small Business Index has been conducted. Covering a survey period of January 22–February 2, the score now stands at negative four (-4), down 14 points from the previous survey (November 2008), and 118 points lower than the Index high of 114 (November 2006). It is the first time the index has dropped below zero. A score of zero indicates that small-business owners, as a group, are neutral—neither optimistic nor pessimistic—about their companies' situations.

The Index is the sum of "present situation" and "future expectations" of small-business owners for six key measures, including financial situation, cash flow, revenues, capital allocation spending, job hiring and credit availability. The "present situation" score dropped eight points to negative five (-5), and "future expectations" dropped six points to one (1).

"These clearly are difficult times for many small businesses," said Dr. Scott Anderson, senior economist at Wells Fargo. "According to the survey, capital allocation and job creation plans didn't deteriorate from the fourth quarter, but more small businesses reported a worsening financial situation and cash flow, slowing revenue growth and less credit available."

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