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US small business confidence up but worries remain
February 25, 2008 / 5:40 PM / 10 years ago

US small business confidence up but worries remain

NEW YORK, Feb 25 (Reuters) - U.S. small business confidence improved this month for the first time since July, but more than two-thirds of those surveyed still felt the economy was getting worse.

Credit card provider Discover’s Small Business Watch index rose to 90.9 in February from January’s 86.3, reflecting some reassurance in the Federal Reserve’s string of interest rate cuts and a planned $150 billion stimulus package from Washington.

But a hefty 67 percent of respondents believe conditions are getting worse, and 43 percent said they experienced “cash flow issues” in the last 90 days.

The U.S. economy has been gripped by a housing crisis that has spread deep into the financial system, denting investor confidence and battering the stock market.

The survey pointed to doubts about the effectiveness of government efforts to stem the crisis. Fifty-nine percent of small business owners said they did not expect the rescue package to benefit their firms directly.

“The recent state of the economy has been affecting small business owners at work and at home,” the report said.

“Forty-one percent of owners said current economic conditions have forced them to reduce business spending, and 67 percent report having to curtail personal spending. Another 55 percent have been forced to reduce the amount of money they take out of their businesses.”

In this context, the overall gain in confidence was an encouraging sign, but only a very preliminary one.

If the goal of politicians in Washington is for the tax rebate plan to be spent as quickly as possible, they should expect mixed results.

Of 4,000 consumers polled separately by Discover, 59 percent said they expect to receive a rebate under the package. Of those, 53 percent planned to spend it, 33 percent planned to save it and 14 percent were not sure how they would use it. (Editing by Dan Grebler)

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