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Small Business Owners Losing Faith in U.S. Economy July 11, 2006 - Linknet Business News

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Small Business Owners Losing Faith in U.S. Economy

According to a study by the National Federation of Independent Business, many owners of small business are scaling back plans to hire workers, buy inventory, and make capital expenditures over the next few months. This reflects a general feeling that the U.S. economy will be weaker over the short term.

The NFIB index of small business optimism fell 1.8 points in June to 96.7 on the back of weaker job creation plans, declining inventories and fading hopes for the expansion.

The decline is largely due to high expectations registered in May. Since then business expectations have moderated and many business people have decided the time is not right for expansion. This is also reflected in hiring plan cutbacks and reductions in plans to add to inventories.

In general, it seems small business thinks the U.S. economy is going to slow down in the 2nd part of 2006. Of those surveyed only 13% expected sales increases in the coming months, as compared to 20% just a few months ago.


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