Wells Fargo/Gallup Small Business Index: Future Expectations Show Optimism

San Francisco — May 18, 2009 -- According to the Wells Fargo/Gallup Small Business Index, surveyed April 1-14, small business owners’ optimism for the future rose for the first time since 2007. The “future expectations” (next 12 months) score rose nine points (to 10) while the “present situation” score dropped 6 points to negative eleven (-11). These metrics comprise the overall Index score, which reflects six key measures: financial situation, cash flow, revenues, capital spending, job hiring and credit availability.

Responses to questions about “financial situation” and “capital spending” contributed to the increase in the future expectations score; Business owners with “very good” or “somewhat good” financial situation expectations increased 11 percent from last quarter’s survey results. Expectations for “a little” or “a lot” of increase in capital spending rose 44 percent from last quarter.

The overall small business owner optimism score rose to -1 (negative one). Although statistically insignificant (margin of sampling error is +/- 4 points), this is a three point increase from the previous survey’s score -4 (negative four), surveyed January 22-February 2. A score of zero means small business owners, as a group, are neutral -- neither optimistic nor pessimistic -- about their companies’ situations. The index high of 114 occurred in November 2006.

About the Small Business Index

For the last 24 quarters, the Wells Fargo/Gallup Small Business Index has surveyed small business owners on current and future perceptions of their business financial situation. The Index consists of two dimensions: 1) Owners’ ratings of the current situation of their businesses and, 2) Owners’ ratings of how they expect their businesses to perform over the next 12 months. An Index score of zero indicates that small business owners, as a group, are neutral -- neither optimistic nor pessimistic -- about their companies’ situations. Results are based on telephone interviews with 602 small business owners nationwide conducted April 1- April 14, 2009. The Overall Small Business Index is computed from a formula that scores and sums the answers to 12 questions—6 about the present situation and 6 about the future. The Overall index can range from -400 (the most negative score possible) to +400 (the most positive score possible), but in practice takes on a much more limited range. The margin of sampling error is +/- 4 percentage points.

Source: Wells Fargo