SBET Jan 2019

Transcript

1 1201 F Street NW Suite 200 Washington, DC 20004 NFIB.com SMALL BUSINESS NFIB ECONOMIC TRENDS NFIB SMALL BUSINESS ECONOMIC TRENDS William C. Dunkelberg Holly Wade May 2018 9 J anuary 201 SMALL BUSINESS OPTIMISM INDEX COMPONENTS S e a s ona l l y C ha ng e fr om C ontr i buti on to Inde x C ompone nt A dj us te d Le v e l La s t M onth Inde x C ha ng e % 18 Plans to Increase Employment % -5 15 a Pla to Make C ns 26 % % pital Outlays 1 -3 % P o Increase Inventories 1 % -7 20 lans t % t Economy to Improve Exp 6 -10 29 % ec xpe % % ct Real Sales Higher 16 E -7 20 Curre nt In % -2 6 % -3 ventory nt Jo re b Openings 35 % -4 11 % Cur ect ed Cred Exp -5 it Conditions % 1 -3 % % N me to Expand 20 % -4 11 ow a Go od Ti ends -5 % 2 -6 % Ea ngs Tr rni T nge -35 100% l Cha ota Based on a Survey of Small and Independent Business Owners

2 NFIB Research has collected Small Business Center Trends Data Quarterly surveys since Economic with monthly The since 1986 . and sample is 1973 surveys the membership files of the National drawn from of Independent Business (NFIB) . Each was Federation mailed a and one reminder . questionnaire for monthly SBET issues are Subscriptions twelve 250 . Historical and unadjusted data $ available, are along a copy of with questionnaire, from the NFIB the Research Center . You may reproduce Small Business Economic Trends if you cite the publication items NFIB and and note it is name copyright of the date a Research Center . © NFIB Research Center . ISBS # 0940791 - 24 - 2 . Chief Economist William C . Dunkelberg and Research and Policy Director, Holly Analysis are responsible for the report . Wade Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Optimism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Credit Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Capital Outlays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Most Important Problem . . . . . . . . . . . . . . . . . . . . 18 Survey Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Economic Survey. . . . . . . . . . . . . . . . . . . . . . . . . . . .20

3 OPTIMISM INDEX The Small Business Optimism Index declined 3.2 points to 101.2, the lowest reading since the last three weeks of November 2016 when the Index jumped from 95 to 102 after election results were announced. Three Index components increased modestly while seven declined. Except for a decline in inventory investment plans from stratospheric levels, half of the weakness came from softer expectations for real sales growth and business conditions in the second half of the year . There was a deterioration in the rates of bill payment and receivables collection, but this may well be a result of the temporary government shutdown. Overall, the January data reveal a solid small business sector that has some increased concern about how uncertainties may resolve themselves later in the year. LABOR MARKETS Job creation was solid in January with a net addition of 0.33 workers per firm (including those making no change in employment), up from 0.25 in December, affirming the outsized job number reported by the Department of Labor and the best reading since July 2018. Fifteen percent (unchanged) reported increasing employment an average of 3.1 workers per firm and 7 percent (down 3 points) reported reducing employment an average of 3.0 workers per firm (seasonally adjusted ). - percent reported hiring or trying to hire (down 4 points), but Fifty six 49 percent (88 percent of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill (down 2 Twenty - three points). percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem, unchanged from last month and 2 points below the record high. Thirty - five percent of all owners reported job openings they could not fill in the current period, down 4 points from December’s record high. Thirteen percent reported using temporary workers (unchanged). A adjusted net 18 percent plan to create new jobs, down 5 seasonally - points from December’s reading. - nine percent have openings Twenty for skilled workers and 12 percent have openings for unskilled labor. But 29 percent of owners reported few qualified applicants for their open positions and 20 percent reported none. CAPITAL SPENDING Sixty percent reported capital outlays, down 1 point. Of those making expenditures, 43 percent reported spending on new equipment (up 1 Quarterly Report point), 26 percent acquired vehicles (up 1 point), and 16 percent improved or expanded facilities (up 1 point). Seven percent acquired new buildings or land for expansion (up 1 point) and 15 percent spent money for new fixtures and furniture (unchanged ). From the start of the recovery in mid 2009 to the end of 2016, an average of 54 percent - of small businesses made any capital expenditure, the driving force behind productivity improvements. But s ince 2016, reports of expenditures have averaged 60 percent. Twenty - six percent plan capital outlays in the next few months, up 1 point. Plans to invest were most frequent in manufacturing, agriculture, and transportation. This survey was conducted in January 2019. A sample of 10,000 small - business owners/members was drawn. rate of 17 percent. One thousand seven hundred and forty ( 1,740) usable responses were received — a response 1 | NFIB Small Business Economic Trends

4 SALES AND INVENTORIES A net 4 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months, unchanged, solid, but the The net percent reporting higher sales lowest reading in a year. averaged 2 percent in 2017 but 8 percent in 2018, with a peak value of 15 percent. The net percent of owners expecting higher real sales volumes fell 7 points to a net 16 percent of owners. For perspective, in 3.0. the 12 months prior to the 2016 election, the average was - The net percent of owners reporting inventory increases rose 4 points adjusted). The net percent of owners to a net 7 percent (seasonally viewing current inventory stocks as “too low” lost 2 points to a net negative 3 percent, historically a favorable reading but a little less comfortable than in 2018. The percent of owners planning to expand inventory stocks fell 7 points from exceptionally high levels to 1 percent of owners, positive and consistent with the increase in concerns about the size of current stocks. INFLATION The net percent of owners raising average selling prices fell 2 points to Finance , insurance and real a net 15 percent, seasonally adjusted. estate firms most frequently reported raising their average prices, . In no industry group did the percent followed by firms in construction raising prices exceed the percent raising worker compensation, good news for inflation watchers adjusted, a net 27 percent plan . Seasonally Overall , inflationary pressures are minimal price hikes (up 2 points). . COMPENSATION AND EARNINGS Reports of higher worker compensation rose 1 point to a net 36 percent of all firms, 1 point below the record high reached last September. Plans to raise compensation fell 4 points to a net 20 percent, suggesting some slowing in compensation gains as job creation plans faded a bit. Twenty - three percent (2 points below November’s record high) selected “finding qualified labor” as their top problem. The frequency of reports of positive profit trends business rose 2 points to a net negative 5 percent reporting quarter on quarter profit improvements, historically a very positive reading. Forty percent of those reporting weaker profits blamed sales, only 8 percent blamed labor costs, and 24 percent cited the usual seasonal change. For those reporting higher profits, 60 percent credited sales volumes. Quarterly Report CREDIT MARKETS Three percent of owners reported that all their borrowing needs were historically - three percent reported all not satisfied, very low. Thirty credit needs met (up 1 point) and 49 percent said they were not interested in a loan, down 1 point. Four percent reported their last historically low . Two loan was harder to get than the previous one, percent reported that financing was their top business problem (down 1 point) compared to 15 percent citing taxes and 12 percent citing regulations and red tape. The percent of owners reporting paying a percent a higher rate on their most recent loan fell 4 points to 20 month after the highest reading since 2007. Thirty - three percent of all owners reported borrowing on a regular basis. The average rate paid on short maturity loans rose 50 basis points to 6.9 percent. 2 | NFIB Small Business Economic Trends

5 January was an unusual month, a “government shutdown,” uncertainty about federal budgets, and plenty of financial market commentators talking “slowdown” in Europe, China, and in the U.S. For small businesses, hiring and hiring plans signaled a strong economy, job openings were strong, inconsistent with rising weakness in the economy. Inventory spending and capital spending were solid. Of course, that is the “rear view mirror” and owners did express concerns about future sales growth, some weakness in business conditions later in the year and some deterioration in conditions that would be supportive of business expansion. The economy is at “full employment” and it’s hard to grow fast from that position, but solid growth would certainly be welcome. Part of the management team in Washington has changed and the House of Representatives is now controlled by the Democrats. The new dynamics have created an inability to agree on basic policy measures producing the longest partial government shutdown in history. This has elevated the level of “uncertainty” which is damaging to economic activity. The NFIB Uncertainty Index rose 7 points to 86, the fifth highest reading in the survey’s 45 year history, not a surprising move given the political and financial markets disfunction in January. There is more talk about “recession risk.” A very credible commentator on the economy pointed out that GDP grew on average 3.9 percent in the year prior to the start of a recession, arguing that strong growth in 2018 (rear view) is no indicator of growth this year. Growth of near 4 percent is very strong, and this history would suggest that growth at those rates created imbalances that “mother nature” (markets) corrected — call it a recession. As of this month, the economy looks strong, including manufacturing and construction, usually areas of concern. Perhaps it is a good sign that current growth is closer to 2.9 percent — creating fewer “imbalances” to fix but very solid for consumers and businesses. Quarterly Report 3 | NFIB Small Business Economic Trends

6 OPTIMISM INDEX Based on Ten Survey Indicators (Seasonally Adjusted 1986=100) 110 100 90 80 Index Value (1986=100) 70 09 07 05 03 01 99 97 95 93 91 89 87 85 83 81 79 19 17 15 13 11 75 77 YEAR OPTIMISM INDEX Based on Ten Survey Indicators (Seasonally Adjusted 1986=100) Jul Aug S ep Oc t Nov Dec Jan Feb Mar Apr May Jun 2014 94.0 91.6 94.0 94.8 96.2 95.4 96.0 95.9 95.3 96.0 97.8 100.3 2015 97.7 98.1 95.7 96.5 97.9 94.6 95.7 95.7 96.0 96.0 94.5 95.2 2016 93.9 93.0 92.6 93.6 93.8 94.5 94.6 94.4 94.1 94.9 98.4 105.8 2017 105.9 105.3 104.7 104.5 104.5 103.6 105.2 105.3 103.0 103.8 107.5 104.9 2018 106.9 107.6 104.7 104.8 107.8 107.2 107.9 108.8 107.9 107.4 104.8 104.4 101.2 2019 OUTLOOK Good Time to Expand and Expected General Business Conditions January Quarter 1974 to January Quarter 2019 (Seasonally Adjusted) Quarterly Report 80 40 60 30 40 20 20 0 (thick line) 10 Expected General -20 Business Conditions (thin line) -40 0 Percent "Better" Minus "Worse" Percent "Good Time to Expand" 06 88 90 92 74 96 98 00 02 04 78 08 10 12 14 16 18 76 80 82 84 86 94 4 | NFIB Small Business Economic Trends YEAR

7 OUTLOOK FOR EXPANSION Percent Next Three Months “Good Time to Expand” (Seasonally Adjusted) Jan Feb Mar Apr May Jun Jul Aug S ep Oc t Nov Dec 10 2014 9 9 10 8 10 6 12 11 11 15 8 2015 13 13 11 11 14 10 12 11 11 13 12 8 23 2016 10 8 6 8 9 8 8 9 7 9 11 27 23 2017 25 22 22 24 27 27 23 17 21 23 34 2018 32 28 27 34 29 32 32 33 30 29 24 2019 20 MOST IMPORTANT REASON FOR EXPANSION OUTLOOK Reason Percent by Expansion Outlook January 2019 Not Good Ti me Unc ertai n R eas on Good Ti me Ec onomi c C ondi ti ons 12 10 9 5 4 4 S al es Pros pec ts Fi n. & I nteres t R ates 0 2 2 C os t of Expans i on 6 4 0 2 Pol i ti c al C l i mate 17 8 Other/Not Avai l abl e 8 5 1 OUTLOOK FOR GENERAL BUSINESS CONDITIONS Net Percent (“Better” Minus “Worse”) Six Months From Now (Seasonally Adjusted) Quarterly Report Jul Aug S ep Oc t Nov Dec Jan Feb Mar Apr May Jun -5 -11 -16 -13 -8 -1 -9 -5 -5 -4 10 2014 12 -15 -6 -6 -8 -3 -8 -10 -5 -2 2 0 2015 -4 0 -12 -5 -9 -18 50 -17 -21 -21 2016 12 -7 -13 48 31 37 37 33 39 38 46 47 48 2017 32 37 33 35 43 32 30 37 41 2018 34 33 33 22 16 2019 6 5 | NFIB Small Business Economic Trends

8 EARNINGS Actual Last Three Months January Quarter 1974 to January Quarter 2019 (Seasonally Adjusted) 0 -10 -20 -30 Net Percent -40 -50 18 16 14 12 74 76 78 80 10 84 86 88 90 82 94 96 98 00 02 04 06 08 92 YEAR ACTUAL EARNINGS CHANGES Net Percent (“Higher” Minus “Lower”) Last Three Months Compared to Prior Three Months (Seasonally Adjusted) Mar Apr May Jun Jan Feb Jul Aug S ep Oc t Nov Dec -18 -18 -17 -22 -19 -18 -14 -19 -21 -23 -26 -25 2014 2015 -19 -17 -19 -18 -13 -16 -17 -9 -17 -21 -18 -17 -14 -20 -21 -20 -23 -21 -20 -20 -19 -22 -21 -18 2016 -14 -13 -9 -15 -12 -12 2017 -11 -11 -10 -10 -10 -9 -4 -3 -4 -1 3 -1 -1 1 -1 2018 -3 -4 -7 2019 -5 MOST IMPORTANT REASON FOR LOWER EARNINGS Percent Reason January 2019 Quarterly Report Reason Current Month One Year Ago Two Years Ago Sales Volume 10 9 12 8 Increased Costs* 6 6 Cut Selling Prices 2 3 2 7 Usual Seasonal Change 6 8 4 Other 6 3 * Increased costs include labor, materials, finance, taxes, and regulatory costs. 6 | NFIB Small Business Economic Trends

9 SALES Actual (Prior Three Months) and Expected (Subsequent Three Months) January 1974 to January 2019 (Seasonally Adjusted) 50 40 30 20 10 0 -10 Net Percent Expected -20 Actual -30 -40 98 96 94 92 90 88 86 84 14 80 78 76 74 82 18 16 12 10 08 06 04 02 00 YEAR ACTUAL SALES CHANGES Net Percent (“Higher” Minus “Lower”) Last Three Months Compared to Prior Three Months (Seasonally Adjusted) Jan Feb Mar Apr May Jun Jul Aug S ep Oc t Nov Dec 2014 -9 -6 -6 -3 -2 -4 -3 -3 -2 -3 -4 2 -4 -2 2015 -5 -4 -7 -1 -4 -6 -6 5 -6 -3 -8 -6 -6 -9 -8 -7 -7 -7 2016 -8 -4 -8 -6 5 5 -4 0 3 1 1 -5 9 2017 -2 2 5 9 8 10 8 10 8 8 15 4 2018 8 8 5 2019 4 SALES EXPECTATIONS Net Percent (“Higher” Minus “Lower”) During Next Three Months (Seasonally Adjusted) Quarterly Report Mar Apr May Jun Jul Aug S ep Oc t Nov Dec Jan Feb 15 13 2 13 9 14 12 11 7 6 11 2014 19 -1 2015 14 14 14 9 7 5 7 8 2 6 7 1 4 -1 1 2 1 1 31 0 3 2016 11 1 22 28 29 26 18 20 2017 17 22 27 15 21 34 24 28 2018 25 28 20 21 31 26 29 26 29 23 16 2019 7 | NFIB Small Business Economic Trends

10 PRICES Actual Last Three Months and Planned Next Three Months January Quarter 1974 to January Quarter 2019 (Seasonally Adjusted) 70 60 Actual 50 Planned 40 30 20 10 0 Net Percent -10 -20 -30 12 14 16 18 88 90 92 84 82 80 78 76 74 94 96 98 86 00 02 04 06 08 10 YEAR ACTUAL PRICE CHANGES Net Percent (“Higher” Minus “Lower”) Compared to Three Months Ago (Seasonally Adjusted) Jan Feb Mar Apr May Jun Jul Aug S ep Oc t Nov Dec 5 4 9 11 10 11 7 7 5 2014 4 6 12 3 2015 2 1 4 2 6 1 1 1 4 -1 3 -4 -1 2016 1 -4 -2 3 -1 2 5 6 -4 2 8 10 8 2017 5 6 5 7 7 1 8 9 6 16 14 17 16 16 15 17 11 13 19 14 16 2018 15 2019 PRICE PLANS Net Percent (“Higher” Minus “Lower”) in the Next Three Months (Seasonally Adjusted) Quarterly Report Mar Apr May Jun Jul Aug S ep Oc t Nov Dec Jan Feb 21 2014 19 22 19 21 21 21 22 19 17 20 22 18 2015 18 15 16 17 19 17 15 14 15 18 20 15 24 18 15 14 16 19 16 17 14 16 2016 16 22 2017 21 20 20 18 21 19 23 20 19 22 23 24 2018 23 24 25 22 26 24 25 24 24 28 29 2019 27 8 | NFIB Small Business Economic Trends

11 ACTUAL EMPLOYMENT CHANGES Net Percent (“Increase” Minus “Decrease”) in the Last Three Months (Seasonally Adjusted) Jan Feb Mar Apr May Jun Jul Aug S ep Oc t Nov Dec 2 2 2 2 1 2014 1 0 3 1 1 7 1 2015 5 4 2 2 4 0 0 6 5 0 0 -1 -2 2016 0 -1 -1 -2 -3 -3 3 0 -2 4 1 3 3 4 3 4 5 -1 2 2 -1 3 2 2017 5 5 5 5 1 2018 4 4 4 7 7 3 6 7 2019 QUALIFIED APPLICANTS FOR JOB OPENINGS Percent Few or No Qualified Applicants Jan Feb Mar Apr May Jun Jul Aug S ep Oc t Nov Dec 42 42 46 40 43 46 41 41 43 45 45 2014 38 45 48 48 44 47 2015 44 42 47 42 48 47 48 48 45 44 51 48 2016 48 46 48 48 46 41 42 52 2017 45 48 51 46 52 44 49 52 44 54 47 2018 49 47 47 50 48 55 52 55 53 53 53 54 49 2019 EMPLOYMENT Planned Next Three Months and Current Job Openings January Quarter 1974 to January Quarter 2019 Quarterly Report (Seasonally Adjusted) 40 30 20 10 Percent Planned 0 Job Openings -10 06 04 02 00 98 96 94 88 90 86 84 82 80 78 76 74 18 16 14 12 10 08 92 9 | NFIB Small Business Economic Trends YEAR

12 JOB OPENINGS Percent With Positions Not Able to Fill Right Now (Seasonally Adjusted) Jan Feb Mar Apr May Jun Jul Aug S ep Oc t Nov Dec 25 24 26 2014 24 22 22 22 25 25 24 21 24 27 28 25 26 29 27 24 29 2015 28 28 27 24 2016 28 25 29 27 29 29 30 24 28 31 29 26 30 31 35 30 34 33 30 32 31 2017 31 30 35 37 38 2018 34 34 35 39 34 38 38 35 36 33 2019 35 HIRING PLANS Net Percent (“Increase” Minus “Decrease”) in the Next Three Months (Seasonally Adjusted) Jul Aug S ep Oc t Nov Dec Jan Feb Mar Apr May Jun 11 8 7 7 11 2014 13 15 11 10 9 8 12 9 2015 11 11 12 11 12 15 13 11 12 12 13 10 16 12 11 12 11 9 10 11 2016 9 15 10 19 20 24 18 19 18 2017 15 18 18 16 16 15 2018 23 23 22 22 23 26 20 18 16 20 18 20 18 2019 COMPENSATION Quarterly Report Actual Last Three Months and Planned Next Three Months January 1986 to January 2019 (Seasonally Adjusted) 40 35 30 25 20 15 10 Planned Higher Net Percent 5 Actual Higher 0 -5 06 92 86 96 98 00 02 04 88 08 10 12 14 16 18 90 94 YEAR 10 | NFIB Small Business Economic Trends

13 ACTUAL COMPENSATION CHANGES Net Percent (“Increase” Minus “Decrease”) During Last Three Months (Seasonally Adjusted) Jul Aug S ep Oc t Nov Dec Mar Apr May Jun Jan Feb 2014 23 20 20 21 21 22 18 20 22 24 19 19 23 2015 25 20 22 23 25 21 23 23 22 24 22 21 26 22 24 24 22 25 24 22 22 27 2016 26 28 27 27 26 28 26 30 24 27 27 28 25 2017 2018 31 33 33 35 34 34 37 32 32 31 35 31 2019 36 COMPENSATION PLANS Net Percent (“Increase” Minus “Decrease”) in the Next Three Months (Seasonally Adjusted) Mar Apr May Jun Jul Aug S ep Oc t Nov Dec Jan Feb 13 14 2014 12 14 14 14 15 14 14 14 15 18 21 2015 13 14 13 14 14 12 15 12 16 17 19 15 14 15 12 16 15 2016 14 15 20 15 19 14 15 18 21 17 23 2017 18 17 18 18 18 18 16 21 20 23 24 21 22 25 24 21 19 22 24 2018 20 2019 PRICES AND LABOR COMPENSATION Net Percent Price Increase and Net Percent Compensation Increase Quarterly Report (Seasonally Adjusted) 40 70 35 60 50 30 40 25 30 20 20 10 15 0 10 Prices (Thick Line) -10 5 -20 Labor Compensation (Thin Line) 0 -30 14 16 12 10 08 06 04 02 00 98 96 94 92 90 18 86 84 82 80 78 76 74 88 YEAR 11 | NFIB Small Business Economic Trends

14 CREDIT CONDITIONS Loan Availability Compared to Three Months Ago* January Quarter 1974 to January Quarter 2019 4 0 -4 -8 -12 -16 Net Percent -20 -24 -28 -32 96 94 92 90 88 18 84 82 80 78 76 74 16 14 12 10 08 06 04 02 00 98 86 YEAR * For the population borrowing at least once every three months. REGULAR BORROWERS Percent Borrowing at Least Once Every Three Months Jan Feb Mar Apr May Jun Jul Aug S ep Oc t Nov Dec 31 2014 31 31 33 28 31 29 30 28 30 30 31 29 31 33 30 32 33 2015 30 29 27 28 31 30 30 2016 29 33 29 29 32 28 31 29 32 28 31 29 31 2017 34 30 30 30 31 30 27 28 31 30 2018 35 32 32 29 32 32 28 34 31 32 31 31 33 2019 AVAILABILITY OF LOANS Net Percent (“Easier” Minus “Harder”) Quarterly Report Compared to Three Months Ago (Regular Borrowers) Jul Aug S ep Oc t Nov Dec Mar Apr May Jun Jan Feb -4 -5 -3 2014 -6 -8 -8 -5 -6 -6 -5 -5 -7 -4 -5 -3 -5 -4 -3 -4 -4 -4 -4 -3 -4 2015 -5 2016 -5 -5 -6 -4 -4 -5 -4 -4 -5 -4 -5 -4 -4 2017 -4 -3 -6 -3 -3 -3 -3 -4 -3 -5 -4 2018 -5 -5 -4 -3 -5 -3 -2 -5 -5 -4 -3 -4 2019 12 | NFIB Small Business Economic Trends

15 BORROWING NEEDS SATISFIED Percent of All Businesses Last Three Months Satisfied/ Percent of All Businesses Last Three Months Not Satisfied (All Borrowers) Jan Feb Mar Apr May Jun Jul Aug S ep Oc t Nov Dec 31/5 29/5 30/5 30/5 30/5 27/6 30/6 28/4 28/6 29/4 29/4 32/4 2014 32/4 33/3 35/5 31/4 30/4 32/5 32/4 33/3 30/2 30/3 32/3 32/4 2015 35/3 31/4 31/5 31/4 31/4 32/5 30/3 29/4 32/6 29/4 30/4 29/4 2016 31/4 30/3 32/4 32/3 31/3 27/4 31/3 34/3 33/2 29/4 32/4 32/3 2017 2018 31/3 32/2 31/4 32/4 37/4 30/3 32/3 33/3 27/3 30/3 32/3 32/4 2019 33/3 EXPECTED CREDIT CONDITIONS Net Percent (“Easier” Minus “Harder”) During Next Three Months (Regular Borrowers) Jul Aug S ep Oc t Nov Dec Mar Apr May Jun Jan Feb -6 -5 -7 -7 -5 -7 -7 -7 2014 -6 -5 -7 -5 -6 -5 -4 -6 -4 -4 -4 -5 -7 2015 -5 -4 -6 -5 -6 -7 -5 -5 -6 -6 -6 -6 -7 -7 2016 -6 -4 -4 2017 -3 -3 -3 -4 -4 -3 -4 -3 -4 -5 -3 -5 -6 -5 -5 -6 -4 -4 -5 -6 -6 2018 -4 2019 -5 INTEREST RATES Relative Rates and Actual Rates Last Three Months Quarterly Report January Quarter 1974 to January Quarter 2019 50 20 40 30 15 20 10 0 -10 10 -20 Actual (thin line) -30 Relative (thick line) 5 -40 80 86 92 74 04 10 16 98 YEAR 13 | NFIB Small Business Economic Trends

16 RELATIVE INTEREST RATE PAID BY REGULAR BORROWERS* Net Percent (“Higher” Minus “Lower”) Compared to Three Months Ago Jan Feb Mar Apr May Jun Jul Aug S ep Oc t Nov Dec 3 0 2014 4 3 2 2 2 -1 0 2 1 2 1 -1 2015 2 0 1 2 1 2 1 2 0 2 6 6 4 4 4 2 2 3 1 2 4 2016 7 11 10 11 9 9 11 2017 8 11 8 8 9 8 24 17 2018 12 13 15 16 16 14 17 16 17 19 20 2019 *Borrowing at Least Once Every Three Months. ACTUAL INTEREST RATE PAID ON SHORT - TERM LOANS BY BORROWERS Average Interest Rate Paid Jan Feb Mar Apr May Jun Jul Aug S ep Oc t Nov Dec 5.7 5.4 5.4 5.6 2014 5.7 5.1 5.4 5.3 5.4 5.5 5.6 5.3 5.3 5.1 2015 5.0 4.7 5.1 4.8 5.4 5.2 5.0 4.8 5.0 5.7 5.3 5.4 2016 5.7 5.6 5.5 5.7 5.3 5.3 5.2 5.2 6.2 5.2 5.9 6.1 5.7 6.0 5.6 5.5 2017 5.6 5.7 5.9 5.4 5.4 5.4 2018 6.1 6.4 6.1 6.4 7.3 6.3 6.1 6.4 6.4 6.1 5.7 5.9 2019 6.9 INVENTORIES Quarterly Report Actual (Last Three Months) and Planned (Next Three Months) January Quarter 1974 to January Quarter 2019 (Seasonally Adjusted) 15 10 5 0 -5 -10 Actual -15 Net Percent -20 Planned -25 -30 86 92 90 88 80 84 82 78 76 74 18 16 14 12 10 08 06 04 02 00 98 96 94 14 | NFIB Small Business Economic Trends YEAR

17 ACTUAL INVENTORY CHANGES Net Percent (“Increase” Minus “Decrease”) During Last Three Months (Seasonally Adjusted) Jan Feb Mar Apr May Jun Jul Aug S ep Oc t Nov Dec -4 -3 -7 -6 -3 2014 -2 -3 -7 -1 1 1 -4 2015 2 1 -5 -1 -4 0 2 -2 0 -2 -4 0 -5 2016 -3 -5 -6 -6 -3 0 -4 -3 -3 3 -2 -2 3 1 0 -1 -1 -3 1 1 -2 0 -2 2017 4 3 6 4 5 2018 4 7 3 4 4 -2 4 2019 7 INVENTORY SATISFACTION Net Percent (“Too Low” Minus “Too Large”) at Present Time (Seasonally Adjusted) Jan Mar Apr May Jun Jul Aug Sep Oct Nov Dec Feb -2 -5 -2 -2 -3 -2 -3 -2 0 -3 -2 -2 2014 -6 -1 -7 -2 -1 -4 -3 -6 -5 -4 -5 2015 -4 -4 -7 -2 -4 -4 -3 -4 -5 -5 -2 -2 2016 -4 -5 2017 -5 -3 -6 -3 -2 -2 -3 -5 -2 -2 -5 2018 -5 -3 -6 -4 -4 0 -3 -3 -1 -2 -5 -1 -3 2019 INVENTORY PLANS Net Percent (“Increase” Minus “Decrease”) in the Next Three to Six Months Quarterly Report (Seasonally Adjusted) Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 1 -2 -5 2 2 0 -1 0 2 2014 3 1 6 2 2015 3 5 1 3 3 -4 0 1 -1 0 3 -1 0 -3 -1 0 -2 -1 2016 4 4 2 -7 1 5 2017 2 3 1 4 3 2 7 4 7 -1 2 2018 3 4 1 1 4 6 4 10 3 5 2 8 2019 1 15 | NFIB Small Business Economic Trends

18 INVENTORY SATISFACTION AND INVENTORY PLANS Net Percent (“Too Low” Minus “Too Large”) at Present Time Net Percent Planning to Add Inventories in the Next Three to Six Months (Seasonally Adjusted) 15 10 5 0 -5 Percent Satisfaction -10 Inventory Plans -15 82 74 76 78 80 16 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 18 YEAR CAPITAL EXPENDITURES Actual Last Six Months and Planned Next Three Months January Quarter 1974 to January Quarter 2019 (Seasonally Adjusted) 80 60 40 Percent 20 Actual Expected 0 02 80 82 84 86 88 90 92 94 96 98 00 78 04 06 08 10 12 14 16 18 74 76 YEAR ACTUAL CAPITAL EXPENDITURES Percent Making a Capital Expenditure During the Last Six Months Quarterly Report Feb Mar Apr May Jun Aug Sep Oct Nov Dec Jan Jul 58 57 57 55 59 55 56 56 56 57 60 2014 54 59 60 58 60 54 58 61 58 58 58 62 62 2015 61 57 59 60 58 2016 59 57 55 57 55 63 58 59 59 64 59 62 57 57 60 2017 59 59 61 62 60 61 58 61 62 59 58 56 2018 59 61 61 66 2019 60 16 | NFIB Small Business Economic Trends

19 TYPE OF CAPITAL EXPENDITURES MADE Percent Purchasing or Leasing During Last Six Months One Year Ago Two Years Ago Type Current Vehicles 26 28 28 44 42 Equipment 43 Furniture or Fixtures 13 13 15 6 Add. Bldgs. or Land 7 6 16 16 16 Improved Bldgs. or Land AMOUNT OF CAPITAL EXPENDITURES MADE Percent Distribution of Per Firm Expenditures During the Last Six Months Amount Current One Year Ago Two Years Ago 3 3 3 $1 to $999 7 8 8 $1,000 to $4,999 $5,000 to $9,999 6 5 6 20 18 $10,000 to $49,999 19 10 $50,000 to $99,999 11 11 14 15 14 $100,000 + 0 0 No Answer 0 CAPITAL EXPENDITURE PLANS Percent Planning a Capital Expenditure During Next Three to Six Months Quarterly Report Feb Aug Sep Oct Nov Dec Jul Jan Mar Apr May Jun 23 24 22 24 24 23 25 29 24 27 25 28 2014 25 25 22 25 25 24 26 26 27 27 25 25 2015 25 23 25 25 23 26 25 28 27 27 24 29 2016 2017 27 26 29 27 28 30 28 32 27 27 26 27 2018 29 29 26 29 30 29 30 33 30 30 29 25 2019 26 17 | NFIB Small Business Economic Trends

20 SINGLE MOST IMPORTANT PROBLEM January 2019 One Survey Survey Problem Current Year Ago High Low Taxes 15 19 32 8 Inflation 2 1 41 0 Poor Sales 9 9 33 2 2 Fin. & Interest Rates 2 37 2 2 8 6 9 Cost of Labor 4 Govt. Reqs. & Red Tape 12 16 27 14 9 9 4 Comp. From Large Bus. Quality of Labor 23 22 23 3 Cost/Avail. of Insurance 9 10 29 4 6 2 31 11 Other SELECTED SINGLE MOST IMPORTANT PROBLEM Insurance, Big Business Competition, Inflation, and Regulation January Quarter 1974 to January Quarter 2019 40 Insurance Big Business Inflation Regulation 30 20 10 Percent of Firms 0 04 82 84 86 88 90 92 94 96 98 00 76 80 06 08 10 12 14 16 18 78 74 02 YEAR SELECTED SINGLE MOST IMPORTANT PROBLEM Quarterly Report Sales, Fin. & Interest Rates, Labor Cost, Labor Quality, and Taxes January Quarter 1974 to January Quarter 2019 40 Sales Taxes Labor Quality Interest Rates 30 20 10 Percent of Firms 0 06 88 90 92 94 96 78 00 02 04 80 08 10 12 14 16 18 76 74 82 84 86 98 18 | NFIB Small Business Economic Trends YEAR

21 OWNER/MEMBERS PARTICIPATING IN ECONOMIC SURVEY NFIB Actual Number of Firms Aug Sep Oct Nov Dec Jul Mar Apr May Jun Feb Jan 672 1645 598 608 1502 615 568 2014 1864 792 685 1699 678 616 575 1500 716 1663 2015 509 601 556 1411 656 620 1495 735 1703 619 724 723 1702 2016 1438 756 727 1644 700 730 2017 704 1618 495 544 629 1513 713 624 1533 699 764 1873 621 562 570 1554 642 665 1718 680 642 1743 1658 700 2018 2019 1740 NFIB OWNER/MEMBERS PARTICIPATING IN ECONOMIC SURVEY Industry of Small Business 25 20 15 10 Percent 5 0 NFIB OWNER/MEMBERS PARTICIPATING IN ECONOMIC SURVEY Number of Full and Part - Time Employees Quarterly Report 30 25 20 15 Percent 10 5 0 19 | NFIB Small Business Economic Trends

22 S MALL USINESS S URVEY Q UESTIONS P AGE IN R EPORT B Do you think the next three months will be a good time for small business to expand substantially? Why? . . . . . . . . . . . . . . 4 About the economy in general, do you think that six months from now general business conditions will be better than they are now, about the same, or worse? . . . . . . . . . . . 5 Were your net earnings or “income” (after taxes) from your business during the last calendar quarter higher, lower, or 6 about the same as they were for the quarter before?. . . . . . . . . . . . If higher or lower, what is the most important reason?. . . . . . . . . . 6 During the last calendar quarter, was your dollar sales volume higher, lower, or about the same as it was for the quarter before?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Overall, what do you expect to happen to real volume (number of units) of goods and/or services that you will sell during the next three months?. . . . . . . . . . . . . . . . . . . . . . . . . 7 How are your average selling prices compared to three months ago?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 In the next three months, do you plan to change the 8 average selling prices of your goods and/or services? . . . . . . . . . . . During the last three months, did the total number of employees in your firm increase, decrease, or stay about the same?. . . . . . . . . 9 If you have filled or attempted to fill any job openings in the past three months, how many qualified applicants were there for the position(s)?. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Quarterly Report Do you have any job openings that you are not able 10 to fill right now?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . In the next three months, do you expect to increase or decrease the total number of people working for you? . . . . . . . . . 10 Over the past three months, did you change the average employee compensation?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Do you plan to change average employee compensation during the next three months?. . . . . . . . . . . . . . . . . . . . . . . . . . . 11 20 | NFIB Small Business Economic Trends

23 S MALL USINESS S URVEY Q UESTIONS P AGE IN R EPORT B Are...loans easier or harder to get than they were three months ago? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 During the last three months, was your firm able to satisfy its borrowing needs? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Do you expect to find it easier or harder to obtain your required financing during the next three months? . . . . . . . . . . . . . 13 If you borrow money regularly (at least once every three months) as part of your business activity, how does the rate of interest payable on your most recent loan compare with that paid three months ago? . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 If you borrowed within the last three months for business purposes, and the loan maturity (pay back period) was 1 year or less, what interest rate did you pay? . . . . . . . . . . . . . . . . . . 14 During the last three months, did you increase or decrease your inventories? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 At the present time, do you feel your inventories are too large, about right, or inadequate? . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Looking ahead to the next three months to six months, do you expect, on balance, to add to your inventories, keep them about the same, or decrease them? . . . . . . . . . . . . . . . 15 During the last six months, has your firm made any capital expenditures to improve or purchase equipment, buildings, or land? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 If [your firm made any capital expenditures], what was the total cost of all these projects? . . . . . . . . . . . . . . . . . . . . . . . . 17 Looking ahead to the next three to six months, do you expect to make any capital expenditures for plant and/or physical equipment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Monthly Report What is the single most important problem facing your business today? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Please classify your major business activity, using one of the categories of example below . . . . . . . . . . . . . . . . . . . . . . . . 19 - time, How many employees do you have full and part including yourself? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 21 | NFIB Small Business Economic Trends

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