Small Business Economic Confidence Rises 4th Straight Month

November 2006

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Small business owners’ confidence in the U.S. economy rose for the fourth straight month in November as the Discover^® Small Business Watch^SM surged 10 points to 130.  Powering the increase was a substantial increase in the number of business owners who say that conditions for their business will be better in the next six months.

Learn more about the research methodology for the Small Business Watch.

November Key Findings

• Nearly half, or 49 percent, rate the U.S. economy as “Excellent” or “Good,” up from 44 percent in October. Twenty-two percent rate it “Poor,” the same number as the previous month. 
  
• Forty-five percent say economic conditions for their business will get better over the next six months, up from 37 percent in October.  The percentage of owners who feel economic conditions are getting worse dropped to 30 percent, compared to 35 percent last month.
• Thirty-six percent feel that economic conditions in the U.S. are getting better, compared to 31 percent in October.  Those who feel conditions are getting worse dropped to 48 percent, down from 59 percent in August 2006.
  
  "Small business owners are more optimistic and plan to invest further in themselves in the near term,” said Sastry Rachakonda, director of Discover Business Card. “Well over a third, 39 percent, plan to put more money into business development over the next six months, which is up from 32 percent last month. It is heartening to see the small business confidence in the economy as we start the holiday season and head into a new year."
  

Spotlight Poll: Holiday Shopping

• While 13 percent of  consumers surveyed expect to do most of their holiday shopping at a small retail or specialty shop this year,  nearly a third, 29 percent, will likely turn to small retail or specialty shops to buy “very special” gifts.
  

Holiday Tokens Prompt High Loyalty

• Forty-one percent of consumers indicated that receiving a token of appreciation from a small business during the holiday season would make them more likely to return for future business. This is particularly strong among younger consumers, ages 18 to 29, at 59 percent.
  
• Twenty-six percent of small business owners said they would be purchasing holiday gifts for major customers this year. About half of those who buy gifts, 49 percent, spend $25 to $100 on a major customer.
  
  "The fact that many people look to small businesses to buy their most special holiday gifts is a great testimony to the superior service small business owners provide and the trust that consumer place in them.” Rachakonda said. “And, in turn, the holidays give small business owners a chance to thank their customers for their loyalty, and our survey shows that investing in appreciation pays great dividends."
  

The Discover Small Business Watch is a monthly index of the economic confidence of the nation's 22 million businesses with 5 or fewer employees. Learn about our research methodology.