Small business confidence plummeted last month by the largest amount since the height of the financial crisis as lackluster economic growth and anemic job creation begins to take its toll on America's small businesses.
The National Federation of Independent Businesses said its Small Business Optimism Index dropped 3.2 points to 89.0, its steepest decline since October 2008. The index reversed two months of gains.
The NFIB said the consistent readings below 90 -- 19 of the last 21 months have registered a sub-90 score -- was "unprecedented in survey history."
"The performance of the economy is mediocre at best," the small business advocacy group said in their report. "The small business sector is not on a positive trajectory and with this half of the private sector 'missing in action', the poor growth performance is no surprise."
From plans to create new jobs to expected sales to capital spending, the report shows that small business owners continue to retrench, potentially prolonging economic pain. Nearly 15 million American workers remain unemployed. Nearly half have been out of work for at least six months.
"Owners do not trust the economic policies in place or proposed and are distressed by global and
national developments that make the future more uncertain," the NFIB said.
- Just one percent more of owners plan to create new jobs, only the second positive reading in 20 months. The NFIB noted that "since the third quarter of 2009, job creation plans have underperformed the recoveries from the other two deep recessions covered by the NFIB survey";
"While political leaders trumpet their ideological attempts to remake the economy and save 'small business', more and more ordinary folks are wondering what in the world are they are thinking," the NFIB report stated. "Either policymakers have no idea how to help the economy or they are intentionally committing it to unsustainable expenditure growth and deficits so large that there will be no alternative but to raise taxes, a slow suicide for a dynamic economy."
While President Barack Obama and Federal Reserve Chairman Ben Bernanke continue to implore banks to lend more to stimulate the economy and boost job creation -- with Obama pressing Congress to authorize additional taxpayer money to support private business lending -- the NFIB reports that small businesses maintain their position that sales and a poor economy are the biggest hurdles.
About half the firms participating in the NFIB survey had less than five employees.
Nine out of ten small businesses reported that all of their credit needs were met last month, according to the NFIB report. Just six percent of owners said "finance" was their single most important problem. Rather, poor sales, taxes and government red tape took the top three spots.
"What businesses need are customers, giving them a reason to hire and make capital expenditures and borrow to support those activities," the NFIB said.
And financing has rarely been cheaper: borrowers paid an average of 6.0 percent interest on short-term loans, a drop of 50 basis points from May, the report shows. The lowest interest rate the NFIB has found in its survey was 5.9 percent, which was achieved last November. A basis point is equal to 0.01 percentage point.
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Shahien Nasiripour is the business reporter for the Huffington Post. You can send him an e-mail; bookmark his page; subscribe to his RSS feed; follow him on Twitter; friend him on Facebook; become a fan; and/or get e-mail alerts when he reports the latest news.