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Small Business Economic Trends

THE SMALL BUSINESS ECONOMY

1

Small Business Economic Trends

2

Small Business Economic Trends REAL GROSS DOMESTIC PRODUCT AND TOTAL NON-­‐FARM EMPLOYMENT Employment

15,500

142,000 140,000

15,000

138,000

14,500

136,000

14,000 134,000

13,500

132,000

13,000 12,500

130,000

12,000

128,000

# of Non-­‐farm Employees, in thousands

Chained Dollars (2009), in billions

16,000

GDP

00 01 02 03 04 05 06 07 08 09 10 11 12 13 Year 3

Small Business Economic Trends

CHANGE IN U.S. EMPLOYMENT: RECESSIONS

2 1960

0

1973

-­‐2

1981

-­‐4

2001

1990 2007

-­‐6 -­‐8

0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72

Percent change from start of recession

4

Months from start of recession Source: Federal Reserve Bank of Minneapolis

4

Small Business Economic Trends

THE INDEX OF CONSUMER SENTIMENT 120 110

Index

100 90 80 70

14

12

10

08

06

04

02

00

98

96

94

92

90

88

86

84

82

50

80

60

Year Source: Thomson Reuters/ University of Michigan

5

Small Business Economic Trends

Source: United State Census Bureau, Survey of ConstrucXon (SOC) and the Building Permits Survey (BPS)

14

12

10

08

06

04

02

00

98

96

94

92

2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400

90

# of Units, in thousands

NEW PRIVATELY OWNED HOUSING UNITS STARTED

Year 6

Small Business Economic Trends

HOMEOWNERSHIP RATES 70 69

Percent

68 67 66 65 64

14

12

10

08

06

04

02

00

98

96

94

92

90

88

86

84

82

62

80

63

Year Source: Census Bureau

7

Small Business Economic Trends

SMALL BUSINESS OPTIMISM

INDEX AND COMPONENTS

8

Small Business Economic Trends SMALL BUSINESS OPTIMISM INDEX Based on Ten Survey Indicators (Seasonally Adjusted 1986=100)

•

110 105

95 90 85

from most current data point

13

11

09

07

05

03

01

99

97

95

93

91

89

87

85

83

81

79

75

77

80 75

Index

100

Year 9

Small Business Economic Trends

GOOD TIME TO EXPAND

Percent Next Three Months “Good Time to Expand” (Seasonally Adjusted)

25 20 15 10

14

12

10

08

06

04

02

00

98

96

94

92

90

88

86

84

82

80

78

0

76

5 74

Percent of Firms

30

Year

10

Small Business Economic Trends

BAD TIME TO EXPAND

Due to PoliXcal Climate 30

20 15 10

14

13

12

11

10

09

08

07

06

05

04

03

02

01

00

99

98

97

96

0

95

5 93 94

Percent of Firms

25

Year 11

Small Business Economic Trends

OUTLOOK FOR GENERAL BUSINESS CONDITIONS

70 60 50 40 30 20 10 0 -­‐10 -­‐20 -­‐30 -­‐40

74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Net Percent of Firms

Net Percent (“Be_er” Minus “Worse”) Six Months From Now (Seasonally Adjusted)

Year 12

Small Business Economic Trends

ACTUAL SALES CHANGES

Net Percent (“Higher” Minus “Lower”) Last Three Months Compared to Prior Three Months (Seasonally Adjusted)

20 10 0 -­‐10 -­‐20 -­‐30 -­‐40

74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Net Percent of Firms

30

Year

13

Small Business Economic Trends

SINGLE MOST IMPORTANT PROBLEM Financing and Interest Rates

40 30

Fed. Chairman Paul Volcker

25 20 15 10

14

12

10

08

06

04

02

00

98

96

94

92

90

88

86

84

82

80

78

0

76

5 74

Percent of Firms

35

Year

14

Small Business Economic Trends

PERCENT OF ALL FIRMS NOT WANTING A LOAN 55

Beginning of Recession

53 49 47 45 43 41 39

12

09

06

03

00

35

97

37 94

Percent of Firms

51

Year 15

Small Business Economic Trends

ACTUAL PRICE CHANGES

Net Percent (“Higher” Minus “Lower”) Compared to Three Months Ago (Seasonally Adjusted)

50 30 10

14

12

10

08

06

04

02

00

98

96

94

92

90

88

86

84

82

80

78

-­‐30

76

-­‐10 74

Net Percent of Firms

70

Year 16

Small Business Economic Trends

SINGLE MOST IMPORTANT PROBLEM InflaXon

45 40 Energy Crisis

30 25 20

Energy Spike

15 10

14

12

10

08

06

04

02

00

98

96

94

92

90

88

86

84

82

80

78

0

76

5 74

Percent of Firms

35

Year 17

Small Business Economic Trends

ACTUAL CAPITAL EXPENDITURES

Percent Making a Capital Expenditure During the Last Six Months

75 Leasing Added

70 Percent of Firms

65 60 55 50

13

11

09

07

05

03

01

99

97

95

93

91

89

87

85

83

81

40

79

45

Year 18

Small Business Economic Trends

SMALL BUSINESS & TRADE • 13% HAVE FOREIGN SALES, 29% OF MANUFACTURERS • FOR EXPORTERS, UNDER 5% OF SALES FOR 70% OF THE FIRMS • 32% CANADA, 14% ASIA, 13% MEXICO, 12% TO BRITISH ISLES • ONLY 12% MARKET REGULARLY OVERSEAS • 13% MADE PURCHASES DIRECTLY FROM OVERSEAS VENDORS, 25% IN MANUFACTURING • TRANSACTIONS COSTS ARE HIGH, BUT TECHNOLOGY AND TRANSPORTATION COSTS IMPROVING CAPABILITY • RANKS 75TH OUT OF 75 “MOST IMPORTANT PROBLEMS 19

Small Business Economic Trends

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Small Business Economic Trends

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