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Small Business Optimism Negative for First Time in Survey History

March 28, 2009

Wells Fargo Gallup Survey:  Small business owners’ optimism recently dropped to its lowest level in the six years that the Wells Fargo/Gallup Small Business Index has been conducted. Covering a survey period of January 22 – February 2, the score now stands at negative four (-4), down 14 points from the previous survey (November, 2008), and 118 points lower than the Index high of 114 (November, 2006). It is the first time the index has dropped below zero. A score of zero indicates that small business owners, as a group, are neutral — neither optimistic nor pessimistic — about their companies’ situations.


The Index is the sum of “present situation” and “future expectations” of small business owners for six key measures, including financial situation, cash flow, revenues, capital allocation spending, job hiring and credit availability. The “present situation” score dropped eight points to negative five (-5), and “future expectations” dropped six points to one (1).

“These clearly are difficult times for many small businesses,” said Dr. Scott Anderson, senior economist at Wells Fargo. “According to the survey, capital allocation and job creation plans didn’t deteriorate from the fourth quarter but more small businesses reported a worsening financial situation and cash flow, slowing revenue growth, and less credit available.”

About the Small Business Index
For the last 23 quarters, the Wells Fargo/Gallup Small Business Index has surveyed small business owners on current and future perceptions of their business financial situation. The Index consists of two dimensions: 1) Owners’ ratings of the current situation of their businesses and, 2) Owners’ ratings of how they expect their businesses to perform over the next 12 months. An Index score of zero indicates that small business owners, as a group, are neutral — neither optimistic nor pessimistic — about their companies’ situations. Results are based on telephone interviews with 604 small business owners nationwide conducted January 22 – February 2, 2009. The Overall Small Business Index is computed from a formula that scores and sums the answers to 12 questions—6 about the present situation and 6 about the future. The Overall index can range from -400 (the most negative score possible) to +400 (the most positive score possible), but in practice takes on a much more limited range. The margin of sampling error is +/- 4 percentage points.

About Gallup — For more than 70 years, Gallup has been a recognized leader in the measurement and analysis of people’s attitudes, opinions and behavior. While best known for the Gallup Poll, founded in 1935, Gallup’s current activities consist largely of providing marketing and management research, advisory services and education to the world’s largest corporations and institutions.

About Wells Fargo — Wells Fargo & Company is a diversified financial services company with $1.3 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 11,000 stores, over 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally.

Wells Fargo is America’s #1 small business lender in total dollar volume according to the most recent Community Reinvestment Act data (2007) and the #1 SBA 7a national bank lender in total dollar volume (2008). Wells Fargo has loaned more than $38 billion to women, African American, Latino and Asian business owners since 1995. For more information, speak with a Wells Fargo banker, visit wellsfargo.com/biz or call the National Business Banking Center at 1-800-CALL-WELLS.

Note: Survey results available upon request.

  
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