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Small business optimism dips for second straight quarter

The latest Wells Fargo Small Business Index revealed small business owners are less optimistic than they were in April when they were less optimistic than they were in January. 

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That was the bad news. The good news was they are more optimistic now than they were at this time last year.

“Our latest optimism index shows that small business optimism has declined slightly for two consecutive quarters,” said Marcus Cobbe, Wells Fargo’s Northeast Small Business Strategist.

The survey asked business owners about their current financial situation and outlook on the future. Optimism dropped to a score of 59 in July, down from 64 in April and from 71 January. That marked the first time the score has dipped in two consecutive quarters since 2012.

The Index is computed using a formula that scores and sums the answers to 12 questions. Six were about the present situation and six about the future. A score of zero indicates that small business owners, as a group, are neutral about their companies’ situations. The overall Index can range from -400, which would be the most negative score possible, to +400, the most positive score possible.

“While there’s a short term decline in optimism, overall things are heading in the right direction. When I speak with small business owners in New Jersey they say they do feel better now than they did a year ago. They feel more confident in the economy and they have a better ability to create jobs,” Cobbe saidd.

Small business owners were also asked the challenges they faced. Their answers included:

  • Attracting customers and finding new business (14 percent);
  • Government regulations (11 percent); and
  • Hiring and retaining quality staff (10 percent)

High taxes were also a big concern, Cobbe said. The challenges have been consistently reported as top concerns since early 2013 when the question was added to the survey.

Results are based on telephone interviews with 600 small business owners, with annual revenues up to $20 million, in all 50 United States conducted July 6-10, 2015. The margin of error is +/- four percentage points. The highest Index reading was +114 in the fourth quarter of 2006, and the lowest reading was -28 in the third quarter of 2010.

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