Small-Business Confidence Dips to Lowest Level Since July 2010

· September 13, 2011, 8:16 AM ET

Small-Business Confidence Dips to Lowest Level Since July 2010

WHEN WE TALK ABOUT AND MODEL INVESTMENT WE WILL DISCUSS THE IMPORTANT ROLE PLAYED BY ANIMAL SPIRITS - BASICALLY HOW CONFIDENT BUSINESSES ARE ABOUT CURRENT AND FUTURE CONDITIONS. AS WE CAN SEE FROM THIS ARTICLE - SMALL BUSINESSES HAVE NEGATIVE ANIMAL SPIRITS MEANING LITTLE OR NO OPTIMISM ABOUT THE FUTURE. THIS CONTRASTS IN A BIG WAY TO THE LAST HALF OF THE 1990S, WHEN 'THE FUTURE WAS SO BRIGHT YOU HAD TO WEAR SHADES.' THE $100 QUESTION IS HOW TO TURN THIS PESSIMISM AROUND!!!!!

Small-business owner confidence fell to its lowest level in just over a year, according to data released Tuesday.

The National Federation of Independent Business‘s small-business optimism index fell to 88.1 in August, down from 89.9 in July. The drop was the sixth consecutive decline and put the index at its lowest reading since a similar 88.1 posted in July 2010.

“The expansion is officially two years and two months old, but the small business half of the economy is still in the ‘tank’,” the report said.

Expectations for real sales growth and business conditions were the major drivers of the decline.

The subindex of expected business conditions in the next six months plunged 11 percentage points to -26%, and the expected higher real sales index plummeted 10 points to -12%.

The earnings trend subindex slipped 2 points to -26% in August.

Despite the overall pessimism, the August employment subindex rose 3 points to 5%. And the subindex covering hard-to-fill job openings rose 3 points to 15%.

Even so, the jobs index is weak by historical measures, and hiring has suffered over the summer. The report said business owners reported reducing employment an average of 0.08 workers per firm over the past few months, driven primarily by losses in construction.

Pricing power eased sharply. The NFIB said that on a seasonally-adjusted basis, the net percent raising selling prices fell 6 points to 1% last month.

“The price surge that emerged on Main Street a few months ago has dissipated, taking the pressure off of the inflation measures,” the report said.

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