Academic journal article Journal of Accountancy

Business Groups Differ on Economic Outlook

Academic journal article Journal of Accountancy

Business Groups Differ on Economic Outlook

Article excerpt

The confusion over the direction of the economy in 1992 was demonstrated by the release of two recent surveys of business managers by highly respected organizations. These surveys came to very different conclusions, even though they were released within 10 days of each other.

Small business gloom deepens

A quarterly survey of 2,000 small companies conducted by the National Federation of Independent Business (NFIB) in January 1992 found the NFIB's small business optimism index fell to 98.2, the lowest level since fall 1990.

Only 10% of the small companies reported job openings, down from 14% in the previous quarter. Average employment dropped to .45 employees per company, the lowest level in 18 months.

However, hiring plans held steady. Of the small companies polled, 13% expected to add workers by midyear, while 9% anticipated layoffs. After seasonal adjustments, however, both figures are unchanged from the previous quarter.

The average interest rate paid by small companies during the period dipped 70 basis points to 9.8%, but borrowing activity rose only slightly to 35% from a record low 33% in the previous quarter.

Only 15% of the companies polled raised prices in the final 3 months of 1991, compared with 24% in the year-earlier period. …

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