The National Federation of Independent Business Index of Small Business Optimism fell 2.8 points in January to 91.8 (1986=100), the lowest reading since January 1991.
But some of the underlying numbers related to employment are not as weak as one would expect to see when optimism is so low.
"The Index is sending a recession signal," said NFIB Chief Economist William Dunkelberg, adding, "But by comparison, this January reading is more of a recession in expectations than in hard economic data. Hiring plans and job openings are much stronger today than in 1991" (emphasis added).
So why the long faces on American entrepreneurs? It may be that they have heard the negative drum beat from the media (and some politicians) and believe it must be true. Their condition is not so bad, but from what they hear everyone else is falling on hard times, so things must be bad. Don't underestimate the psychology that can drive economic conditions.
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