Small Business Owner Optimism at Five-Year Low

Latest Wells Fargo/Gallup Survey: Index drops 35 points since January, falling to the lowest level reported since the survey's inception 


SAN FRANCISCO, May 27  /PRNewswire-FirstCall/ -- Small business owner optimism continues on a five-quarter decline, according to the recent Wells Fargo/Gallup Small Business Index (Index) survey conducted in April. The Index score dropped to 48, the lowest level reported since the survey's inception in August 2003, when the score was 69.

The most recent results represent a 35-point drop from the previous survey in January 2008, and a 66-point drop from the Index's highest score of 114 in December 2006. The 35-point drop is the Index's largest quarterly decrease to date. The Index score is the sum of both current and future expectations of small business owners for six key measures: financial situation, cash flow, revenues, capital allocation, job hiring, and credit availability.

Small business owners' future expectations for the next 12 months fell sharply to 30, a 15-point drop from the previous quarter. Small business owners' ratings of their current situation dropped 20 points from January to 18. While each of the six key measures in the Index continued to reflect a drop from the previous quarter, the most significant changes were found in small business owners' present revenue situation and future expectations for cash flow and financial situation.

"The nearly-50 percent drop in the Index clearly reflects the intensified financial pressures small business owners have felt over the last three months," said Dr. Scott Anderson, Wells Fargo senior economist. "The decline in both the present situation and future expectations components doesn't bode well for a swift recovery in small business conditions. However, as consumers begin to receive -- and spend -- their economic stimulus checks, this should soon begin easing the blow to small businesses in the third quarter of this year."

Despite the drop in overall optimism, survey respondents said they feel satisfied being small business owners. Satisfaction levels were relatively unchanged from January -- down only four points to 86 percent. Additionally, 94 percent of respondents said they feel successful being a small business owner, virtually unchanged from all prior quarters.

About the Small Business Index

For the last 19 quarters, the Wells Fargo/Gallup Small Business Index has surveyed small business owners on their current and future perceptions of their business financial situation. The Index consists of two dimensions: 1) Owners' ratings of the current situation of their businesses and, 2) Owners' ratings of how they expect their businesses to perform over the next 12 months. An Index score of zero reflects that an equal number of small business owners are optimistic and pessimistic about their companies' situation. Results are based on telephone interviews with 600 small business owners nationwide conducted April 2-16, 2008.  The margin of sampling error is +/- 4 percentage points.

About the Gallup Organization

For more than 60 years, the Gallup Organization has been a recognized leader in the measurement and analysis of people's attitudes, opinions and behavior.  While best known for the Gallup Poll, founded in 1935, Gallup's current activities consist largely of providing marketing and management research, advisory services and education to the world's largest corporations and institutions.

About Wells Fargo

Wells Fargo & Company is a diversified financial services company with $595 billion in assets, providing banking, insurance, investments, mortgage and consumer finance through almost 6,000 stores and the internet (wellsfargo.com) across North America and internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of only two banks worldwide, to have the highest possible credit rating from both Moody's Investors Service, "Aaa," and Standard & Poor's Ratings Services, "AAA."

Wells Fargo is America's #1 small business lender in total dollar volume according to the most recent Community Reinvestment Act data (2006) and the #1 SBA 7a bank lender in total dollar volume. Wells Fargo has loaned close to $36 billion to women, African American, Latino and Asian business owners since 1995.  For more information, speak with a Wells Fargo banker, visit wellsfargo.com/biz or call the National Business Banking Center at 1-800-CALL-WELLS.

Note to Editors:  Survey results available upon request. 

DATASOURCE: Wells Fargo & Company



CONTACT:  Media, Allison White of Wells Fargo & Company, [phone],





Web site:  http://www.wellsfargo.com/ 

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