For the fifth consecutive month, NFIB’s monthly Small-Business Optimism Index fell, dropping 0.9 points in July–a larger decline than in each of the previous three months–and bringing the Index down to 89.9. This is below the average Index reading of 90.2 for the last two-year period. Put simply, they are losing what little optimism they had been building during what had been hyped as the beginning of a recovery. They now fear that there really was no recovery after all and more bad times are likely ahead.
Expectations for future real sales growth and improved business conditions were the major contributors to the decline in optimism. Remember that this survey was completed before the events of the last two weeks.
“Given the current political climate, the protracted debate over how to handle the nation’s debt and spending, and the now this latest development of the debt downgrade, expectations for growth are low and uncertainty is great,” said NFIB Chief Economist Bill Dunkelberg. “And considering the confidence-draining performance of policy makers, there is little hope that Washington will stop hemorrhaging money and put spending back on a sustainable course. Perhaps we might begin referring to the ‘Small-Business Pessimism Index’ from now on.”
I am hearing economists who had been hopeful for our economy to muddle along and grow ever so slightly changing their tune. More and more are talking “double dip”. Since I do not agree that a true recovery has ever really taken root, I prefer to call it a “second plunge.”
“And what should the government do now?”
That is the wrong question to frame the debate. It is what the government has done over the past two administrations that has magnified the problems in our economy.
Governments cannot create a sustained economic expansion through spending and monetary policy.
Businesses and their customers do that. Stop bleeding them of their money and get out of their way.
About Dr. Jeffrey R Cornwall
Dr. Jeff Cornwall, veteran business professor, author, and co-founder and former CEO of a fast-growing health care company in Raleigh, N.C., is the inaugural Jack C. Massey Chair in Entrepreneurship and Director for the Center for Entrepreneurship in the College of Business Administration at Belmont University. Before joining the business faculty at Belmont University in Nashville, Tennessee, he was the Sandra Schulze Chair in Entrepreneurship at the University of St. Thomas in St. Paul, Minnesota, and a faculty member at the University of Wisconsin-Oshkosh and the University of Kentucky.
His current research and teaching interests include entrepreneurial finance and entrepreneurial ethics. Dr. Cornwall has authored or co-authored six books: Bringing Your Business to Life, Bootstrapping, Organizational Entrepreneurship, Entrepreneurial Financial Management, The Entrepreneurial Educator, and From the Group Up: Entrepreneurial School Leadership.
His blog, the Entrepreneurial Mind, is one of the most popular small business blogs on the web. It was named by Forbes as “Best of the Web” and is part of the Forbes blog network. The Entrepreneurial Mind is also linked to by Entrepreneur, Inc., the New York Times, and US News and World Report.
Dr. Cornwall developed his interest in entrepreneurship at a young age. He explains:
I grew up with entrepreneurship and small business as topics around the dinner table at night. My family was involved in many ventures. My father left a career in corporate America to pursue an entrepreneurial career in the mid-1970s. Today, my father is an active, octogenarian entrepreneur. I was fortunate to be able to be involved in many of my father’s entrepreneurial endeavors from an early age. That is where I caught the entrepreneurial bug that I carried forward in my own career as an entrepreneur.