The Recovery Figures Larger

The NFIB's latest survey provides further confirmation that the recent good news about economic growth won't be a flash in the pan

If the latest Small Business Optimism Index is any indication, the year should end with a bang. Just released by the National Federation of Independent Business's (NFIB), the latest survey of business owners highlights marked gains in October over September's figures for planned capital spending, reported sales, and new hires. Now standing at 104, the October index is the year's second-highest. "The economy is hitting on all cylinders," says William Dunkelberg, the NFIB's chief economist. "Fourth-quarter growth will be very strong."

All employment components of the index were up, with roughly one business in four adding a fresh employee. Though that increase is fairly small in itself, the figure assumes a much greater importance when judged against the recent trend: Over the past 33 months, job growth has been positive in only 7 of them. The number of businesses planning to increase total employment also rose, in this case by 2 points. Says Dunkelberg: "Owners say, contrary to popular opinion, jobs are being created."

October's upbeat news held true for sales as well, with 41% of survey respondents expecting to move more goods and services. By contrast, only 24% of respondents expect to see volume decline. The earnings trends, though still in negative territory, also showed some improvement, rising 3 basis points. Based on the survey results, Dunkelberg predicts the fourth quarter will see an unemployment rate of 6.3%, real GDP growth of 5.4% and CPI inflation at 1.5%. If those figures materialize, it should be a very merry holiday season.

By Edward Popper in New York

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