From average citizens to billionaire Warren Buffett, some have been convinced that the United States is in a recession. The University of Michigan reports that 9 out of 10 consumers think the economy is in a recession. Warren Buffett has now famously declared that in his opinion we are in a recession.
Of course, many do not agree that we are in a recession. And certain signs in the past few weeks suggest things may not be as bad as feared. James Cooper writes over at BusinessWeek:
Recession is still very much a matter of opinion, not a matter of fact. Some economists are even taking at least a half-step back from their previous beliefs that a downturn is all but inevitable. So far, most of the economic data outside of homebuilding and house prices have not met the recession forecasters’ downbeat expectations. Businesses are reining in their capital spending, but not dramatically. Employment losses have not matched the size of those in past recessions. And even consumer spending through April, at least outside of flagging auto sales, is holding up far better than expected.
So what do small business owners think about the economy?
According to the most recent Small Business Economic Trends report by the NFIB, the sentiment of small business owners remains near record lows. However, it improved slightly during April. Here is the chart:
The blue circle shows the March small business optimism index ranking, at 89.6, the lowest in five years. The red arrow shows that optimism increased a bit in April, to 91.5. That’s still low, but at least the move was in the right direction — up.
Remember that sentiment is about how confident business owners feel about the economy and the decisions they are making to spend, hire and otherwise run their businesses. It’s not a measure of actual results.
But could this slight improvement mean that small business sentiment is on the upswing, and that businesses will start spending more and expanding?
Hard to tell based on just one month’s data. Let’s hope so.