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Small-business owners are feeling slightly more confident in the health of the U.S. economy despite recent cash-flow problems, Discover Financial Services found in a monthly survey. The percentage of surveyed small-business owners who believe the U.S. economy is getting worse declined to 60% in August from 71% in July, according to the Discover Small Business Watch. The Watch provides a monthly index measuring the relative economic confidence of 1,000 randomly selected U.S. small-business owners, calculated by assigning values to responses to six consistent questions. The base value was established at 100 using the results of a survey conducted in August 2006, when the Watch began. The Watch rose to 86.9 in August, up 15 points since June and reaching its highest level since March 2007, when it was 111.7. Some 23% of small-business owners surveyed in August said they sense the economy is getting better, compared with 17% who said so in July. Pessimism eased slightly in August, as 51% of small-business owners rated the economy as poor, down from 54% in July. But 42% of small-business owners said in August they had encountered temporary cash-flow issues during the previous 90 days, causing them to hold off on paying some bills, compared with 33% who reported cash-flow difficulties in July. Ryan Scully, director of Discover's business credit card, tells CardLine the increase in owners reporting cash-flow problems appears "significant," but he would not say whether Discover has had a corresponding increase in business credit purchase volume. "We see cautious optimism among small-business owners, ... and a slight easing of gasoline prices in August may have contributed to small-business owners' improving confidence," Scully says. Rasmussen Reports LLC conducted the online survey.
