The National Federation of Independent Business has shown that its latest survey signaled a tanking confidence among its participants. If you think that the woes tied to the fiscal cliff do not matter so much, you might want to consider what this survey found.

The NFIB Small Business Optimism Index fell by a full 5.6 points in November, which it said is bottoming out at 87.5 for the month. The report claims that the two major events in November were the elections and Hurricane Sandy. The report even went on to exclude the results for the states affected by Sandy for comparison. The report said:

When separating the hurricane-impacted states from the remainder, the data makes clear that the election was the primary cause of the decline in owner optimism … it is very clear that a stunning number of owners who expect worse business conditions in six months had far more to do with the decline in small-business confidence.

Today’s report also went on to say that nearly half of business owners are now certain that things will be worse next year than now, and they believe that Washington does not have the needs of small business in mind. Pessimism also is tied to higher health care costs and the coming fiscal cliff. Here is how bad this reading was: the index has been lower only seven times since it started in 1986.

The net percentage of owners expecting better business conditions in six months fell 37 points to a net negative 35%. In October, the percentage of owners who said they were uncertain whether business conditions would be better or worse in six months hit a record low of 23%. Some 49% of the owners now expect business conditions to be worse in six months, while 11% still express uncertainty about the future. Here is a table showing the optimism drop on each component:

This survey was conducted in November 2012 from a sample of 3,938 small-business owners/members, with 733 usable responses received for a response rate of 19%.

JON C. OGG

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