Small-Business Confidence plunges

The small-business community exhibited an overwhelmingly negative response to the presidential election through a dramatic drop in owner confidence, reported by the National Federation of Independent Business Small Business Optimism Index. In one of the lowest readings in survey history, the Index dropped 5.6 points, bottoming out at 87.5.  The two major events in November were the national elections and Hurricane Sandy, which devastated parts of the East Coast. To disentangle these, the results for the states affected by Sandy were excluded from the computation for comparison. When separating the hurricane-impacted states from the remainder, the data makes clear that the election was the primary cause of the decline in owner optimism. The most significant factor influencing the decline in optimism is the expectation that future business conditions will be worse than current ones. The net percent of owners expecting better business conditions in six months fell 37 points to a net negative 35%.