Tuesday, December 11, 2012

November NFIB Small Business Optimism Index Plunges To Level Not Seen Since April 2010

source: NFIB.com
The NFIB Small Business Optimism Index plunged 5.6 points to 87.5 in November, the lowest reading since April 2010 (86.8). It hit 81 in April 2009.

Bill Dunkelberg, NFIB's Chief Economist, said on CNBC today that it's "the tenth worst reading on the index we've had in 37 years. So I think the reason it went down is because people look out into the next 6 months and go you know we are in trouble here."

This is part of the reason why economists expect the Fed to announce QE4 tomorrow (Get Ready For QE4: Fed To Buy $870B More Through 2013, Barclays Says (Forbes); Fed Seen Pumping Up Assets to $4 Trillion in New Buying (Bloomberg)). It also feeds into ECRI's view that a recession started in July 2012. The S&P 500 seems to believe that we'll see a fiscal cliff deal by the end of the year. Watch out for negative catalysts.

Small-Business Owner Confidence Plunges More than Five Points (NFIB press release)

“Something bad happened in November—and based on the NFIB survey data, it wasn’t merely Hurricane Sandy. The storm had a significant impact on the economy, no doubt, but it is very clear that a stunning number of owners who expect worse business conditions in six months had far more to do with the decline in small-business confidence,” said NFIB chief economist Bill Dunkelberg. “Nearly half of owners are now certain that things will be worse next year than they are now. Washington does not have the needs of small business in mind. Between the looming ‘fiscal cliff,’ the promise of higher health-care costs and the endless onslaught of new regulations, owners have found themselves in a state of pessimism. We are forced to ask: is this the new normal?”
"In the history of the monthly Index, only seven readings were lower, all but one in the last few months of 2008 and early 2009, the depths of the last recession. Prior to 1986 (when the survey was conducted on a quarterly basis), there were just two readings lower, 1975Q1 and 1980Q2."

The chart clearly hows that "small-business confidence" has been in a secular decline since the 2007 recession began (when the index broke through lows not seen since 1990-1993). It looks like the optimism index super spiked when home prices peaked in 2005.






Also read, So Much For "Confidence" - NFIB Small Business Outlook Drops To Record Low at Zero Hedge.

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