SBSI Wave-5
The Small Business Economic Climate
Just as sales improved more than expected in the second half of 2010, small business optimism took an upturn and is now at its highest level since the onset of the recession (see Figure 26). A third (35 percent) of small business owners now feel the economic climate for their business is improving, compared to 25 percent feeling this way a year ago and 14 percent two years ago. In contrast, only 19 percent now believe the climate is worsening, compared with 36 percent a year ago and 46 percent two years ago. This significant improvement in optimism is recent, and occurred since June of last year.
Figure 26
Almost half (46 percent) of small businesses feel they have been highly impacted by the recession in the past 12 months (see Figure 27). The impact of the recession reached its peak a year ago, when 50 percent felt they had been greatly impacted (see Figure 28). After minimal change in June, the share of impacted businesses edged down noticeably for the first time in January to 46 percent.
Figure 27
*Note: Non-response not included in sample.
Small business owners’ optimism about the economy in the next 12 months is now at its highest level since the baseline wave at the end of 2009 (see Figure 28). In January, more than twice as many owners expect the economy to improve in 2011 than decline (39 percent compared to 15 percent). The 15 percent expecting a decline can be compared with a year ago when it was 26 percent, and two years ago when it was 48 percent. As with other indicators of optimism reported here, this improvement is recent and occurred since June.
Figure 28
