The National Federation of Independent Business (NFIB) Small Business Economic Trends for January 2010 is filled with 23 pages of graphs and text that suggest there is no recovery on the horizon.



Let's take a look at a summary and some of the graphs. Charts and text with permission of and copyright of the NFIB Research Foundation. Highlights in red are mine.



OPTIMISM INDEX



It has been a very difficult year and 2009 did not end on an uplifting note. The Index of Small Business Optimism lost 0.3 points, falling to 88.0 (1986=100), 7.0 points higher than the survey’s second lowest reading reached in March 2009 (the lowest reading was 80.1 in 1980). But optimism has clearly stalled in spite of the improvements in the economy since the first quarter of 2009.



LABOR MARKETS



The “job generating machine” remains in reverse, jobs are being lost and new hiring is very weak. Ten percent of the owners increased employment, but 22 percent reduced employment (seasonally adjusted). While the trend for increased employment is going in the right direction, there is no indication that job growth will be strong enough to dramatically reduce the unemployment rate. Ten percent (seasonally adjusted) reported unfilled job openings, up two points from November, a good sign. Over the next three months, 15 percent plan to reduce employment (down two points), and eight percent plan to create new jobs (up one point), yielding a seasonally adjusted net negative two percent of owners planning to create new jobs, a one point improvement from November.



CAPITAL SPENDING



The frequency of reported capital outlays over the past six months was unchanged at 44 percent of all firms, holding at a record low level (data first collected in 1979) . Capital spending is on the sidelines. Spending on capital projects remained at historic low levels, as did the demand for credit to finance such projects.



INFLATION



The weak economy continued to put downward pressure on prices. Ten percent of the owners reported raising average selling prices, but 33 percent reported price reductions. Widespread price cutting contributed to the reports of lower nominal sales. Plans to raise prices fell one point to a net seasonally adjusted three percent of owners, 35 points below the July 2008 reading. On the cost or input side, the percent of owners citing inflation as their number one problem (e.g. costs coming in the “back door” of the business) fell two points to two percent and only three percent cited the cost of labor, so neither labor costs nor materials costs are pressuring owners .



PROFITS AND WAGES



Reports of positive profit trends were unchanged at a net negative 43 percentage points. The persistence of this imbalance is bad news for the small business community.



CREDIT MARKETS



Regular borrowers (accessing capital markets at least once a quarter) continued to report difficulties in arranging credit at the highest frequency since 1983. A net 15 percent reported loans harder to get than in their last attempt, unchanged from November. Still that is not nearly as severe as the financial distress reported in the pre-1983 period. Twenty-four months of recession have sapped the financial strength of many small firms .



COMMENTARY



For small business owners, 2009 ended with a thud. The Optimism Index fell and finished just seven points ahead of March which was the second lowest reading in 35 years of survey history, even though the economy posted positive growth in the second half of the year.



Interest rates are at historically low levels, inflation virtually non-existent and real hourly earnings have held up well. ...



So why hasn’t owner optimism soared like it usually does at the end of a recession, especially one that cut so deeply into our economic fabric? The answer is “hope and change.” There is little hope and the change that is being delivered is far from encouraging.



Washington is offering nothing but higher taxes and fines and fees and more regulation. Congress is passing bills with thousands of pages of hidden bombs that will go off as the legislation is passed and implemented. Federal spending has soared amazingly, yet been ineffective except at pushing the federal deficit to incomprehensible heights, promising to double our national debt in just a few years. The interest burden this will place on average Americans is astounding. Uncertainty is the enemy of economic growth and investment, and Washington, D.C., the usual source of uncertainty, is delivering plenty of it. Confidence in our political leadership has tanked . ....

job loss

Wages are low

Prices are low

Pricing power is nonexistent

Optimism is low

Inflation is not a problem