Economy Slowing But Conditions Positive for U.S. Small Business

Economic conditions for small business in the U.S. are positive, although they have weakened somewhat since 2004.

Higher energy costs and rising interest rates are slowing the economy.

Employment, a lagging indicator, is actually still rising nicely. However, this is probably due to employers having held off as long as possible to hire, and now being required to hire to meet customer orders.

What's perhaps more telling is what business owners plan to do in the near future.

According to surveys completed over the past five months, the confidence of U.S. small business owners appears to be cooling a bit when it comes to the economy.

Fewer small businesses say they plan to expand and/or hire in the upcoming three months. It looks like American small businesses are putting the brakes on somewhat.

See the chart to the right where I have summarized some of the data from the U.S. Small Business Administration Office of Advocacy's Economic Indicators Report for the first quarter of 2005. The report came out last week. It may help you forecast economic trends and gauge their impact on the small business market this summer and into the fall.

Remember, as always, to put this report in perspective. It doesn't mean the economy in the U.S. is tanking. It simply signals a slowing of the economy after a nice expansion in 2004.