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American Banker | Tuesday, August 26, 2008
"Small-business owners' confidence in the state of
the U.S. economy inched upward again this month
after setting a record low in June, according to
Discover Financial Services.
The Riverwoods, Ill., credit card company said
Monday that its Small Business Watch index rose
2.3 points, to 86.9. The reading in June was 71.8,
the lowest since the index was introduced in 2006
and pegged at 100. Last month the index rose 12.8
points.
Sixty percent of small-business owners said this
month that they think the U.S. economy is getting
worse, down from 71% last month, and 23% said they
think it is improving, the biggest share to see
improvement since August 2007.
About 51% rated economic conditions as poor,
compared to 54% in July; 15% rated conditions as
good, up from last month's 11%.
Despite this optimism at the macro level, many
small businesses are having problems at the micro
level. Forty-two percent of respondents said they
had experienced cash-flow issues in the past 90
days, up significantly from the 33% who said so in
July.
Thirty percent said they think economic conditions
for their businesses are getting better, compared
to 28% who said so last month, but 44% said
conditions are getting worse, up from 43% last
month.
'We saw an increase in their confidence in the
direction of the overall economy, but that was
offset by more owners saying they're having
cash-flow issues,' Ryan Scully, Discover's
director of business credit cards, said in a press
release. 'Their perceptions of the conditions for
their own businesses were flat, making this gain
harder to pin down. There is still a great amount
of caution out there.'"
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