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"Recession-Type Numbers"

Hopes for a quick recovery have dimmed at many small businesses as sales and profits have fallen -- and that can be expected to trigger a slide in capital spending and employment. Such is the message in the National Federation of Independent Business' latest survey of members.

Sales dropped in June at 37% of the small companies surveyed, and profits fell at 44% of them. One in four small-business owners expects further sales declines this year. The reported revenue and future expectations haven't been so low since the early 1990s, said NFIB Chief Economist William C. Dunkelberg in his summary of the survey results.

Despite the "recession-type numbers," he's still forecasting GDP growth of 1.8% to 2.2%, speculating that the sales declines may be more widespread than deep. "The road ahead looks pretty flat -- no serious dips, but no elevation either," he reported.

"REBATE, SCHMEBATE." Look for the jobless rate to be elevated, however. In June, 15% of small companies trimmed their payrolls, and that number is likely to grow as slumping small businesses find they can no longer afford to hoard their hard-won employees, Dunkelberg said.

Not surprisingly, the small-business community's satisfaction with President Bush is slipping along with cash-register receipts. His economic policies were rated highly by 53% of entrepreneurs, a drop of 8 points since April despite the recent tax cut. In fact, taxes were rated the most important problem by 23% of small-business owners. Apparently, they don't see a tax rebate as the cure for what ails this economy.

By Theresa Forsman in New York

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