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Small-Business Owners Cut Spending, Jobs as Revenues Fall, Gallup Says

PRINCETON, N.J. — Small-business owners were less optimistic in the fourth quarter of 2008 than at any time over the past five years, according to the Wells Fargo/Gallup Small Business Index, which measures small-business owners’ perceptions of their operating environments. The Index score — of 10 — is down from 45 in the third quarter of 2008, and is the lowest score since the Index’s inception in the third quarter of 2003.
Thirty-one percent of small-business owners say their revenues increased over the past 12 months, while 47% say their revenues decreased. The negative 16-point difference is down from +2 in the third quarter, -2 in the second quarter, and +13 in the first quarter of 2008.
With revenues declining, many owners have cut back on capital spending, with only 21% saying they have increased expenditures on such things as machinery, computers and facilities in the last year, and 39% saying they have decreased such spending. This difference of -18 points is down from -7 in the third quarter and +9 as recently as the first quarter of 2008.
Falling revenues have also forced small-business owners to cut jobs, Gallup says. Only 11% say they have increased the number of jobs at their companies over the past 12 months, while 27% say they have cut jobs. This difference of -16 points is down from -8 in the second and third quarters, and +4 in the first quarter of 2008.
 

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