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U.S. Businesses Still Feeling the Recession

Despite word from Washington that the Great Recession officially ended in June 2009, a new study says small-business owners aren’t buying it.

The Index of Small Business Optimism, based on data collected by the National Federation of Independent Business, ticked upward 0.2 points in September, but for the most part, the small-business owners who were polled saw no evidence of recovery , the study’s authors wrote.

An unexpected reversal in job creation prospects helped keep the small-business mood in the doldrums, with a seasonally adjusted net negative 3 percent of owners planning to create new jobs, down 4 points from August. Hiring plans continue to fall short of the recoveries that followed previous recessions, the study reported.

The environment for capital spending is also grim, according to the study, because more owners expect the economy to weaken than to strengthen.

Small-business owners continued to liquidate inventories, and weak sales trends gave little reason to order new stock. September was the 30th negative double-digit month in a row, and the 40th negative in a row for inventory reductions, as small business braced for a continuation of a lean-and-mean retail environment.

Profits are important for the support of capital spending and expansion, but they are hard to spot. Reports of positive profit trends deteriorated 3 points in September, registering a net negative 33 percentage points -- 29 points worse than the best expansion reading, reached in 2005. The persistence of this imbalance is bad news for the small-business community, the study authors said.

Stagnation in the credit market is also helping keep a lid on small-business optimism. Those looking for loans are predominantly looking for cash flow support, not funds to expand or hire, the study said.

•    Double Dip Recession? Depends on Who You Ask
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•    CEOs and Consumers Agree: Economy is Grim

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com.  Follow him on twitter @nedbsmith .

Ned Smith

Ned was senior writer at Sweeney Vesty, an international consulting firm, and was Vice President of communications for iQuest Analytics. Before that, he has been a web editor and managed the Internet and intranet sites for Citizens Communications. He began his journalism career as a police reporter with the Roanoke (Va.) Times, and was managing editor of American Way magazine and senior editor of Us. He was a Captain in the U.S. Air Force and has a masters in journalism from the University of Arizona.