Saturday, November 08, 2008

Investment Demand and Business Expectations

I think these two stories are related. First we've got a decrease in SBA loan guarantees.

According to the data, the number of loans made through the SBA in fiscal 2008 -- which ended Sept. 30 -- fell 27 percent, bringing the total to 2,022. The value of those loans also plummeted 32 percent to $880 million.

In fiscal 2007, the SBA reported 2,960 loans were handed out, adding up to about $1.2 billion.

Second, we've got a story about business owners perceptions of the future.

Arizona small business owners are becoming more pessimistic about the economy, according to a poll released Friday by a Tempe-based public opinion research firm.

The Arizona Economic Indicators Monitor compiled quarterly by O'Neil Associates found that 91 percent of the business owners polled rated the U.S. economy as either fair or poor, and 85 percent rated the Arizona economy as fair or poor. Only 9 percent rated the national economy as good or excellent, and 15 percent so rated the Arizona economy.

Although some seem to think that freeing up credit will restart investment...

But there is hope on the horizon, said Sandy K. Baruah, SBA acting administrator.

He said that the recently signed Emergency Economic Stabilization Act of 2008 could "unclog the arteries of our financial system, allowing credit and capital to flow once again."

I suspect that it won't turn around until business owners feel that they can make a profit on new investments.

But small business owners see hope for future improvement. Twenty-four percent think the economy will be better in three months, up from 17 percent the previous quarter. When the horizon is expanded to one year, 55 percent think the economy will improve over that time, up from 49 percent the previous quarter.

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1 Comments:

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April 5, 2011 at 4:30:00 PM MST  

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