Confidence Increases for Second Straight Month; Politics is a Low Priority

August 2008

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Small business owners’ economic confidence rose for the second straight month in August, climbing away from a 22-month low in June as their concerns about the state of the overall economy improved. The Watch reached 86.9 in August, up 2.3 points from July and more than 15 points higher than June.

"We saw an increase in their confidence in the direction of the overall economy, but that was offset by more owners saying they’re having cash flow issues," said Ryan Scully, director of Discover’s business credit card. "Their perceptions of the conditions for their own businesses were flat, making this gain harder to pin down. There is still a great amount of caution out there."

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

August Highlights

• The number of owners who think the economy is getting worse dropped to 60 percent from 71 percent in July. In addition, 23 percent of small business owners feel the U.S. economy is getting better, which is the highest rating since August 2007.
• 51 percent rate the economy as poor, a decrease from 54 percent in July; while 15 percent ranked it as good, up from 11 percent in July.
• 42 percent say they have experienced cash flow issues over the last 90 days, a significant increase from 33 percent in July 2008.
• Perceptions of their own circumstances remained flat this month: 30 percent of owners say economic conditions for their business are getting better, up slightly from 28 percent in July, while 44 percent say conditions are getting worse, up just a point from 43 percent in July.
  

POLL: Three Out of Four Business Owners Don’t Contribute to Campaigns; More Than Half Think Election Provides No Forum for Their Issues

• As a segment, small business owners are not a politically active group. Only about one quarter of all small business owners have donated time or money to a candidate this year. And 75 percent said they would never consider running for office.
• Fifty-three percent of small business owners do not believe the 2008 election has provided a forum for small business owners to be heard by the candidates while 33 percent said they weren’t sure. Only 14 percent believe small business issues are being heard on the campaign trail.
  
  "It’s not that surprising that small business owners are less apt to get involved in the political process," Scully said. "They are so fiercely independent and hard working that, for one, they don’t have a lot of leftover time or money to donate; and two, they don’t have the lobbying power in Congress that larger corporations do."
  
  The economy continues to rank as the most important issue for small business owners during this presidential election year.  Forty-three percent of owners believe that the economy is the number one issue for this year’s candidates, down slightly from the 47 percent who cited the economy as the most important issue in March 2008.

Other top issues that ranked a distant second include:

• National Security at 11 percent, up 3 percent from March;
  
• Healthcare at 10 percent, up 2 percent from March;
  
• The War in Iraq at 10 percent, down 1 percent from March;
  
• Government Ethics and Corruption at 10 percent, up 2 percent from March; and
  
• Immigration at 8 percent, down from 12 percent in March. 
  
  On the issues, healthcare remains a growing concern. Three out of four small business owners, 72 percent, do not offer health care to their employees. And it is apparently getting harder to find: 70 percent of owners say that finding affordable healthcare for themselves and their employees is very or somewhat difficult, up from 69 percent in January 2008 and 67 percent in January 2007.
  

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.