PR - Discover Small Business Watch Index Drops Again

Economic confidence among small business owners declined for the fourth straight month in November, as increased pessimism over the U.S. economy dragged down indicators of relative stability at the small business level, according to the Discover Small Business Watch. At 93.2, the confidence measure is down from 96.8 in October and from 114.6 at this time last year.

“Challenges in the national economy over the past few months are no doubt influencing the perceptions of small business owners, but there still is stability back on Main Street,” said Sastry Rachakonda, director of Discover’s business credit card. "Cash flow has improved for the past two months, and the dip we’ve seen in their confidence in their own business prospects is far below the drop in confidence they expressed in the health of the overall economy." 

November Key Findings: 

• 68 percent of owners feel that economic conditions in the U.S. are getting worse, a jump from 59 percent in October and 20 points above November 2006. Twenty percent said national conditions are getting better, while 10 percent said economic conditions are staying the same.
• 38 percent said they had experienced cash flow issues over the last 90 days, a decrease from 42 percent in October and 46 percent in September.  
• 31 percent of small business owners feel that economic conditions for their businesses are getting better, a decrease from 35 percent in October.
• Plans for spending on business development are slowing, with 29 percent planning to increase spending on activities such as advertising and inventory, compared with 33 percent in October. Forty-two percent plan to decrease spending, compared to 36 percent in October.

The Discover Small Business Watch is a monthly index measuring the relative economic confidence of U.S. small business owners who employ less than five employees, a segment that consists of 22 million businesses producing more than a trillion dollars in annual receipts. The Watch is based on a national random survey of 1,000 small business owners. It is commissioned by the Discover Business Card and is conducted by Rasmussen Reports, LLC, an independent survey research firm. The numeric index is calculated by assigning values to responses to a set of six consistent questions. The base value of the Watch was established at 100.0 based on surveys conducted in August of 2006. In addition to generating the index, the Small Business Watch surveys small business viewpoints on key business drivers, and also surveys 4,000 consumers to gauge purchasing behavior and attitudes towards small businesses.