Owners Express Increased Optimism about the U.S. Economy and
Economic Conditions for Their Business; Cash Flow Issues Improve
Significantly
POLL: Owners Feeling the Effects of Housing and Credit Market
Turmoil
Forty-Three Percent Say Their Business Will Suffer If Getting
Credit Becomes More Difficult
RIVERWOODS, Ill.--(BUSINESS WIRE)--July 28, 2008--After sinking to
its lowest level in June, economic confidence among small business
owners rebounded in July, as the number of those who said they are
experiencing cash flow issues decreased significantly and general
economic confidence began trending upward. The Discover(R) Small
Business Watch(SM) jumped in July to 84.6, up 12.8 points from 71.8 in
June.
"Based on the results we've seen over the past six months, cash
flow is one of the key indicators that affects small business owners'
confidence in the economy," said Ryan Scully, director of Discover's
business credit card. "Given the substantial decrease in cash flow
concerns that were reported this month, it's not surprising that
economic confidence also rebounded with a double-digit increase."
July Key Findings:
- 33 percent say they have experienced cash flow issues over the
last 90 days, a significant decrease from 42 percent in June.
- 17 percent of small business owners think the U.S. economy is
getting better, an increase from nine percent in June.
- 28 percent of owners say that economic conditions for their
business are getting better, an increase from 23 percent in
June.
- 17 percent rated the economy as good or excellent, an increase
from 12 percent in June.
- 29 percent of owners will be increasing spending over the next
six months on business development activities such as
advertising, inventories and capital expenditures, up from 23
percent in June. Thirty-nine percent plan to decrease
spending.
POLL: Some Owners Feeling Effects of Housing and Credit Market
Turbulence
Approximately four-in-ten small business owners (42%) say that the
nationwide downturn in the housing market has had a negative impact on
their business, while 47 percent say it has not negatively affected
them.
The Watch also regularly tracks trends in how small businesses are
using credit with their customers and the rate of delinquencies they
are seeing. This month, 27 percent of owners said they extend credit
to their customers and 70 percent of this group indicated that their
customers have delayed a payment or asked to delay a payment in the
past three months. Slightly more small business owners - 32 percent -
were extending credit to customers in April 2008; however delayed
payments and requests for extensions that month were higher, at 73
percent. In September 2007, 30 percent of small business owners were
extending credit to their customers and 64 percent received delayed
payments or requests to delay payments.
"As shifts in the housing and credit markets continue to impact
consumers' spending habits, small business commerce will likely
experience a slowdown as a result," said Scully. "The good news is
that even though small business owners are seeing customers delaying
their credit payments, it doesn't appear to be having a negative
impact on their cash flow."
Additional highlights:
- 43 percent of owners say that if obtaining credit becomes more
difficult, it will have a negative impact on their business.
This is significantly higher from the 35 percent who said the
same in August 2007.
- 14 percent of small business owners have applied for a loan or
line of credit in that past three months.
- 72 percent of owners say that the government's economic
stimulus efforts have not had any impact on the profitability
of their business.
- 54 percent of consumers say that now is a good time to buy
real estate.
The views and opinions expressed by small business owners and
consumers who participate in the Small Business Watch survey are their
own and do not necessarily reflect those of Discover Financial
Services or its affiliates.
About the Small Business Watch
The Discover Small Business Watch is a monthly index measuring the
relative economic confidence of U.S. small business owners who employ
less than five employees, a segment that consists of 22 million
businesses producing more than a trillion dollars in annual receipts.
The Watch is based on a national random survey of 1,000 small business
owners. It is commissioned by the Discover Business Card, which
strives to offer the best business credit card for American small
businesses, and is conducted by Rasmussen Reports, LLC
(www.rasmussenreports.com), an independent survey research firm. The
numeric index is calculated by assigning values to responses to a set
of six consistent questions. The base value of the Watch was
established at 100.0 based on surveys conducted in August of 2006. In
addition to generating the index, the Small Business Watch surveys
small business viewpoints on key business drivers, and also surveys
4,000 consumers to gauge purchasing behavior and attitudes towards
small businesses. For past results and small business survey data,
visit www.discovercard.com/business/watch. For information on Discover
Business Card, visit www.discovercard.com/business.
About Discover Financial Services
Discover Financial Services (NYSE: DFS) is a leading credit card
issuer and electronic payment services company with one of the most
recognized brands in U.S. financial services. The company operates the
Discover Card, America's cash rewards pioneer. Since its inception in
1986, the company has become one of the largest card issuers in the
United States. Its payments businesses consist of the Discover
Network, with millions of merchant and cash access locations; PULSE,
one of the nation's leading ATM/debit networks; and Diners Club
International, a global payments network with acceptance in 185
countries and territories. For more information, visit
www.discoverfinancial.com.
CONTACT: Jon Drummond
Discover Financial Services
224-405-1888
or
Daniel Delson
Robinson Lerer & Montgomery
646-805-2036
SOURCE: Discover Financial Services