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Small Business Owner Optimism Remains Strong Despite Drop In July


Latest Wells Fargo/Gallup survey: increased concern about tighter credit

Reflecting doubts about credit availability despite a still-strong economy, small business owner optimism declined slightly but remained strong in July, according to the latest survey results from the quarterly Wells Fargo/Gallup Small Business Index. The Index, the sum of both current and future perceptions, dropped to 100 in July – down 13 points from April. The Index tracks six key measures for both current and future expectations: financial situation, cash flow, revenues, capital allocation, job hiring, and credit availability.

“Economic fundamentals remain solid but the chill of tighter credit is curbing small business owner optimism at a time when the vibrancy of consumer demand is in doubt,” said Dr. Scott Anderson, Wells Fargo senior economist. “Small businesses depend on strong consumer demand for their sales. Declining home prices, high consumer debt levels, and rising food and energy prices have reduced the consumers’ willingness and ability to spend in other areas.”

Small business owners’ current view of the operating environment and financial conditions slipped eight points to 41 in July since the last quarterly reading in April. The percentage of small business owners saying obtaining credit was somewhat or very easy fell five points from 53 percent to 48 percent. Despite a drop in small business owner optimism, 94 percent said they feel successful being small business owners and over three-fourths said they would do it all over again if given the chance.

Small business owners’ future expectations fell five points from April to 59, the lowest level since June 2005. The percentage of small business owners expecting the number of jobs at their company to increase over the next 12 months fell seven points since April to 22 percent in July.

“Since the survey began, small business owner optimism has maintained steady growth and rose to its highest point on record for the Index two quarters ago,” said Rebecca Macieira-Kaufmann, executive vice president and head of Wells Fargo’s Small Business Segment. “A key success factor for this segment of the economy is the ability to remain flexible and resilient despite economic uncertainty and change.”


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