California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

After reaching its highest level in 14 months, the economic confidence among
small business owners fell in May as owners reported cash flow concerns and
expect to cut back on business development spending, according to the latest
survey from Discover Financial Services .Its monthly index dropped more than
10 points to 78.1, down from 88.5 in April.

The survey also notes what it terms “significant drops” in the numbers of small
business owners who think the overall economy is getting better, and number of
owners who thought economic conditions were improving for their own businesses.

According to the result of the May survey, 49 percent of small business owners
say they have experienced temporary cash flow issues in the past 90 days, up 10
percentage points from April. That’s the highest percentage in that category
since the monthly surveys started in August 2006.

Nearly half of small business owners, or 48 percent, see economic conditions for
their businesses getting worse, up from 40 percent in April; 24 percent see conditions
improving, down from 32 percent last month; and 23 percent say conditions are the same;
4 percent were not sure.

Sixty percent of small business operators rate the economy as poor, up from 54 percent
in April. Only 7 percent rate the economy as excellent or good, and 32 percent called
it fair. Almost the same percentage -- 57 percent -- believe the economy is getting
worse, up from 51 percent in April, while 23 percent believe it’s getting better,
down from 31 percent in April; 16 percent say it’s staying the same; and 4 percent
weren’t sure.

More than half (53 percent) of small business owners say they plan to decrease
spending on business development over the next six months, an increase over the
46 percent in April who said the same. Twenty-two percent plan to increase spending,
which is largely unchanged from 21 percent in April; while the number of owners who
were not planning any changes in spending dropped from 30 percent in April to
23 percent in May.

I am Tim Johnson and this has been the California Business Minute.