February 25, 2008

Discover(R) Small Business Watch(SM): Small Business Economic Confidence Rebounds After Six-Month Slide

More Small Business Owners See Economic Conditions for Their
Businesses Improving; Re-investment Plans Increase

Poll: Few Owners Think Federal Stimulus Package Will Have
Significant Effect on Their Small Businesses

RIVERWOODS, Ill.--(BUSINESS WIRE)--Feb. 25, 2008--Small business owners' attitudes about the U.S. economy in February improved for the first time since July 2007, according to the Discover Small Business Watch. The monthly index rose in February to 90.9, a 4.6-point increase over January's 86.3 with noticeable changes in how small business owners view the overall economy and the conditions for their own businesses.

"Small business owners are seeing some of the larger efforts being made to improve the economy, such as the Fed interest rate cuts and slowing down of downward momentum, so they appear to be less apprehensive," said Sastry Rachakonda, director of Discover's business credit card. "Not only are they more positive about their perceived notions of the economy, but they indicated this month more willingness to start investing again in their businesses."

February Key Findings:

  • 34 percent of small business owners said they see economic conditions for their businesses getting better over the next six months, up from 31 percent who felt the same in January.

  • 33 percent said they planned to increase spending on business development activities over the next six months, an increase over 28 percent in January who planned to do the same.

  • 67 percent of small business owners feel that economic conditions in the U.S. are getting worse, a decrease from 74 percent who felt this way in January.

  • 43 percent said they have experienced cash flow issues over the last 90 days, a slight decrease from 44 percent in January, but consistent with the past several months.

Poll: Few Small Business Owners Expect Federal Stimulus to Help Their Businesses; Most Feel Effects of Current Economy at Home

Fifty-nine percent of small business owners believe that Congress' recently-passed $168 billion economic stimulus package will not have a significant impact on their businesses, according to Discover's poll of 1,000 small business owners with five or fewer employees. Only 12 percent could say the stimulus package would have a significant impact on their business, while 29 percent couldn't venture a guess.

The recent state of the economy has been affecting small business owners at work and at home. Forty-one percent of owners said current economic conditions have forced them to reduce business spending, and 67 percent report having to curtail personal spending. Another 55 percent have been forced to reduce the amount of money they take out of their businesses.

"Small Business owners have to be enormously flexible to manage through adverse business circumstances," Rachakonda said. "Business owners will do whatever it takes to keep their businesses going."

February Poll Highlights

  • 54 percent of small business owners expect to receive a rebate as a result of the federal stimulus package, and two out of three of those people planned to put it to personal use (48 percent) or add it to their savings (25 percent).

  • 51 percent of small business owners said their businesses generally rise and fall with economic conditions in the country.

  • 67 percent report not having to borrow money to pay bills for their businesses, while 28 percent said they have been forced to borrow.

  • Of 4,000 consumers polled, 59 percent expected to receive a rebate under the stimulus package. Of those, 53 percent planned to spend it, 33 percent planned to save it, and 14 percent were not sure how they would use it.

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 (, 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 For information on Discover Business Card, visit

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, and PULSE, one of the nation's leading ATM/debit networks. Discover also operates the Goldfish credit card business in the United Kingdom. For more information, visit

CONTACT: Discover Financial Services
Jon Drummond
Robinson Lerer & Montgomery
Daniel Delson

SOURCE: Discover Financial Services