Steady as She Goes

That's the message from a leading small-biz watcher, who says that while the economic climate isn't great, it's not that bad, either

An economist who monitors the pulse of small business says the sector's vital signs indicate slow and steady economic growth for the rest of the year. With a little help from the Federal Reserve and Congress in the form of interest-rate and tax cuts, "We can face down the threats to economic stability," says William C. Dunkelberg, chief economist for the National Federation of Independent Business, in his report on the latest monthly survey of members, taken in April.

He's not the only optimist. Nearly twice as many small-business owners (32%) expect the economy to strengthen over the next six months as expect it to weaken (17%). "This suggests that there is no recession in the near-term outlook, at least no downturn of significant size," Dunkelberg says. A key factor behind such optimism appears to be President Bush's proposed tax cuts -- his economic policy got high marks from 61% of those surveyed.

Still, entrepreneurs are feeling the effects of a weakened economy. April's survey showed:

-- Only 10%, seasonally adjusted, think this is a good time to expand facilities, the lowest percentage in eight years.

-- Just 26% have hard-to-fill jobs openings, vs. 33% on average for last year. Dunkelberg sees this trend supporting his prediction of 5% unemployment by July.

-- When seasonally adjusted, sales are holding steady, with an equal numbers of businesses reporting sales gains and sales losses. Few are expecting a robust recovery: A net 13% of small-business owners expect sales gains in the next six months, a sharp drop from 33% who, in January 2000, saw rising sales on the horizon.

By Theresa Forsman in New York

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