WASHINGTON (11/13/13)--Small business optimism fell to a seven-month low in October, reflecting a general economic malaise in the U.S. resulting from the partial government shutdown.
The National Federation of Independent Business said on Tuesday that its Small Business Optimism Index fell last month by 2.3 points to 91.6. The survey, which polls 1,940 business owners, was conducted amid the budget negotiation crisis in Washington that flirted with the sovereign debt default (Reuters via Chicago Tribune Nov. 12).
Seven of the confidence index's 10 components fell, while only three had dipped in September (FoxBusiness.com Nov. 12). Small business owners expressed pessimism about future sales, job creation, capital and inventory expenditure plans, general economic outlook, sales, and credit availability (Moody's Economy.com Nov 12).
In addition to the 8% of index survey respondents who said they expected credit conditions to worsen, 6% of respondents said that "credit is harder to get" in a separate NFIB measure, fueling concerns that financial markets are suffering long-term consequences because of congressional dysfunction. With the U.S. Small Business Administration unable to service loans during the shutdown, loan volumes in October dropped 55% compared to what they were in October 2012, although they managed to edge toward 25% below the year-ago number measured at the end of the month (Economy.com Nov 12).
The Credit Union National Association has been urging Congress to allow credit unions to play a larger role in helping small businesses through member business loans (MBLs). The statutory cap on MBLs loans, as a proportion of credit union's assets, is currently 12.25%. CUNA says that raising the federal government-mandated ceiling to 25.5% would inject $13 billion into the economy, and help boost employment by 140,000 at no cost to taxpayers.