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Small business optimism fades as economic uncertainties return.

CPAs associated with small business companies or clients should be prepared for a more uncertain climate in the second half of the year. After rising 3.4 points to 102,1 in the first quarter of 1993, the National Federation of Independent Business (NFIB) small business optimism index fell to 97 (1978=100) in the second quarter and now stands at its lowest point since 1991.

The quarterly survey of 2,200 small companies, which was taken in April, revealed 66% of respondents were unhappy with President Clinton's economic policies and 80% rated Congress's economic policies negatively.

The employment outlook for small business was mixed. Twenty-two percent of responding companies planned to increase total employment in the second quarter, while 6% expected cutbacks. However, William C. Dunkelberg, NFIB chief economist, reported that small business job creation was negative for the 11 quarters since the third quarter of 1990. Startup companies were the only small businesses to increase employment during that time.

James B. Downey, president of Kaune Corp., a retail food operation located in Sante Fe, New Mexico, concurred with the survey findings-up to a point. "Everyone agrees the Clinton administration and Congress need to get together to set a workable economic policy. What's more, new taxes are going to be a hardship for all of us," he said. "But here in Sante Fe, business is good, even though it may be hurting on a national level. I'm still optimistic about 1993, regardless of the political climate."
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Jul 1, 1993
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