Small Businesses Less Optimistic About Recovery
A recent survey shows that majority of small businesses in the US were pessimistic about the economic recovery in March due to lack of export assistance from the government and low-interest credit rates.
Washington: Majority of small companies in the US were less optimistic about the economic recovery due to lack of government support such as export assistance and low-interest credit rates, according to a survey released Tuesday.
The National Federation of Independent Business (NFIB) said pessimism among small companies is widespread since the government assistance and incentives mainly targets large-scale firms. Such sentiment from small businesses can significantly slow job creation that will have a negative impact on the road to economic recovery.
According to the group’s report, the optimism among small businesses decreased by 1.2 points and settled to 86.8 in March, the lowest rate since July 2009. On the other hand, separate studies show that large companies’ optimism was rebounding.
In a statement, NFIB chief economist William Dunkelberg said the small business industry is heading in the wrong direction as pessimism is a widespread problem in the sector.
Reports show that half of gross domestic product—which is the total number of products and services produced in the country—comes from small businesses or those which employed less than 50 workers. The sector also accounts one-third of employment in the US.
Over the past several months, small firms reported weak sales which were further aggravated by the difficulty of obtaining bank loans. According to the survey, about 15 percent of small companies said it was hard to get loans in March compared in the previous month.
Despite widespread pessimism, majority of companies said they have stopped massive layoffs and reduction of working hours in March.
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