Tuesday, December 11, 2007

Confidence is Dropping

First, let me state I'm not a big fan of confidence surveys. I like statistics that are numerically verifiable -- total sales, total orders and the like. These numbers are developed from raw, verifiable information. Confidence surveys on the other hand are a bit more "squishy" for my liking.

That being said.

From CNBC:

Small business confidence in the U.S. economy tumbled for the second straight month in November because of worries that economic growth will slow, a survey released on Tuesday showed.

The National Federation of Independent Business said its index of small business optimism fell 1.8 points to 94.4 in November from October to its lowest since 1993.

After the Sept. 18 Federal Reserve rate cut, small business firms cut spending and hiring plans, the NFIB said. Small business expectations weakened further following a second rate cut in October and forecasts for slower economic growth.

"Things were looking good on Main Street until the Fed warned that the economy was at risk of sinking," said NFIB Chief Economist William Dunkelberg.

"That warning had credibility, and the logical response was to cut hiring, capital spending and other growth-related activities," Dunkelberg said. "And indeed that occurred in the last 12 days of September and continued into October and November."

In addition, other surveys are showing a weakness of confidence. Here is a collection of charts from Financial Sense Online:

(The above chart is a the latest CFO confidence survey)

In short, it doesn't look like people are very happy right now.