Small Biz Confidence Declines With Consumer Spending

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Just when America needs them most, small businesses across the country may be losing faith in our economy.

A new survey from the National Federation of Independent Business has found that small businesses owners have a more negative view of the economy in July than at any point in the last four months. Much of the reason for this decline, according to the study, is that “owners have no confidence that economic policies will ‘fix’ the economy.”

The association surveyed more than 2,000 small business owners and found that nearly three quarters of them believe now is a bad time to expand their businesses. In particular, more owners expressed concerns last month that consumer demand is still stymied, perhaps more so now as Americans are saving more and spending less.  “Small business owners continued to liquidate inventories and weak sales trends gave little reason to order new stock,” the report found.

However, not all of the report’s findings are grim. The vast majority of those surveyed (91%) claimed that “all their credit needs” have been satisfied and they are not looking to borrow more. That said, part of the reason that small business owners are not looking for more loans is simply because they don’t believe there is an adequate consumer demand that warrants making further investments in their companies.

“What businesses need are customers, giving them a reason to hire and make capital expenditures and borrow to support those activities,” the report states.

The results in this report could have very tangible effects. As Bloomberg notes, “Today’s report shows small businesses plan to trim investment and are less optimistic about whether it’s a good time to expand.” Unfortunately, a side effect of this is that just 9% of those surveyed plan to increase employment in the next three months. And since most of the jobs in this country, about 64%, come from small businesses, the last thing we need is for these companies to lose steam and stop hiring.

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