Small-business confidence declines in July

By Bernie Becker - 08/14/12 01:21 PM ET

Small-business owners became less confident about economic conditions and their future sales in July, according to an industry index released Tuesday.

The National Federation of Independent Business (NFIB) said its optimism index ticked down to 91.2, a drop of 0.2 points from June – and more than three points below February’s high for the year.

The small business lobby also noted that its index had averaged 90 since the recession ended three years ago – the worst for a recovery period since the NFIB began its survey almost four decades ago.

Bill Dunkelberg, NFIB’s chief economist, chalked up some of the issues to gridlock in Washington, and the tax increases and automatic spending cuts that are set to go into place at the end of the year.

But Dunkelberg also challenged President Obama’s claims that allowing Bush-era tax rates on family income above $250,000 a year would only impact some 3 percent of small businesses. NFIB has often supported Republican causes, and was one of the plaintiffs in the recent Supreme Court decision that upheld the Democratic healthcare overhaul.

“The lack of meaningful actions to address tax reform in Washington adds to the certainty of sluggish growth for the remainder of 2012, and the uncertainty of what will come in 2013,” Dunkelberg said.

The NFIB index is the first index to take into account small-business owners’ response to the Supreme Court decision on the healthcare law.

It also comes as other economic indicators rebounded in July, and as the economy is likely to still play a central role in this fall’s campaign.

The economy added 163,000 jobs last month, even as the unemployment rate ticked up slightly, while retail sales also bounced back more than expected.

On the campaign trail, Rep. Paul Ryan’s (Wis.) addition to the GOP ticket is expected to increase the discussion of deficits and entitlement reform.

But Ryan has also been hitting Obama for his job creation record on the stump, and House Speaker John Boehner’s office also cited Tuesday’s NFIB numbers as it made the case to extend all current tax rates.

According to the index, only five percent of owners think it’s a good time to expand operations, and four out of five owners didn’t make any net change to their employee level in July.