Lower gasoline prices ignite small biz optimism

SAN FRANCISCO
November 8, 2006 6:27am

Sharply declining energy prices and hopes for an economic "soft-landing" are sending small business owner optimism to its highest level in a year and a half, according to a new survey paid for by Well Fargo & Co.

Its “Small Business Index” now stands at 110 -- far exceeding the baseline score of 69 at its inception in August 2003. In the latest survey, conducted by the Gallup Organization, 74 percent of small business owners surveyed said their company's financial situation is very good or good and 79 percent expect to be better off financially a year from now.

"Future expectations are the same as they were six months ago, suggesting little, if any, softening in small business conditions over the next twelve months," says Scott Anderson, senior economist at Wells Fargo. "At the same time, the drop in energy prices and interest rates since July has helped revive current conditions for small businesses.”

Wells Fargo says the survey shows an increasing number of small business owners expecting slight increases in revenues and revenue expectations over the next 12 months, while cash flow, capital spending, and hiring remained constant.

The majority of small business owners -- 94 percent -- continue to feel successful in business, while 92 percent indicated they are satisfied being small business owners, the bank says.

"Our team talks to small business owners every day, and what we hear from them is that they are very optimistic about their future," says Rebecca Macieira-Kaufmann, executive vice president and head of Wells Fargo's small business segment. "Our customers are investing in their future and this bodes well for the overall economy."

If low gasoline prices are making small business people happy, they must be dancing in the streets in New Jersey and South Carolina.

The lowest prices in those two states are around $1.83 to $1.84 per gallon, according to prices reported by Gasbuddy.com, an Internet site that digests reports from thousands of voluntary "price spotters."

Results of the Wells Fargo survey are based on telephone interviews with approximately 600 small business owners nationwide conducted Sept. 27 through Oct. 10. The margin of sampling error is +/- 4 percentage points.