Small-business Optimism Falls to Nearly 2-year Low

Optimism about the economy by U.S. small-business owners slipped last month to a nearly two-year low as concerns about slowing growth led to projections for fewer sales, according to survey results released Tuesday.

The monthly optimism index from the National Federation of Independent Business declined by 1.3 points to 93.9.

The figure is well below the index?s 42-year average of 98 and indicates small business owners are wary of future economic conditions, the group said.

The last time the index was lower was in February 2014.

The Federal Reserve hiked a key interest rate in December and financial markets turned tumultuous at the start of the year. But neither of those events was a major factor in the decline in optimism, said William C. Dunkelberg, the group?s chief economist.

?Most of the decline was accounted for by expected business conditions in the next six months and the expected real sales,? he said. ?These expectations are important determinants of decisions to hire, to expand business operations and to order new inventory, all drivers of the economy.?

Survey results on business spending and hiring held fairly steady, he said.

U.S. economic growth slowed sharply at the end of last year. And after a strong December, job growth slipped to 151,000 in January, the Labor Department said Friday.

With the risk of recession this year still low but rising, economists are watching business and consumer confidence closely.

Continued declines would increase the recession risk and could lead Fed policymakers to hold off on additional interest rate hikes.

(Source: TCA)