U.S. Small Business Optimism Shrinks

The Index of Small Business Optimism fell 1 point from January, falling to 92.9, according to the latest survey from NFIB. The survey confirmed that the small business sector is not headed up with any strength, just treading water waiting for a good reason to invest in the future. Spending and hiring plans weakened a bit as expectations for growth in real sales volumes fell. In addition, earnings trends worsened a bit as owners continued to report widespread gains in worker compensation while holding the line on price. The political climate continued to be the second most frequently cited reason for the current period being a bad time to expand. Political uncertainty remains a major concern and NFIB said the President does not seem inclined to act favorably on any small business owner's major concerns. Meanwhile, University of Michigan's Consumer Sentiment Index posted a modest decline, although reported spending for January was reasonably strong. Still, more owners reported sales trending down than up, quarter on quarter. NFIB said the expectations for future business conditions remained very negative, certainly not supportive of significant increases in hiring or capital spending. "Fed policy communications are very disconcerting, giving an impression that the economy is weak. Too much monthly dithering. All of this generates uncertainty, the enemy of spending and hiring behavior that would move the economy forward at a faster pace," NFIB Chief Economist William Dunkelberg said in a statement.