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Small Businesses Upbeat On Economy
Discover® Small Business WatchSM Reveals Cautious Optimism Among Small Business Owners
Spotlight on Real Estate: Industry in the Throes of Enormous Change; Realtors Facing Increased Pressure
September 25, 2006
Riverwoods, Illinois, September 25, 2006
– The Discover® Small Business WatchSM
rose to 107.7 in September as small business owners
expressed increased confidence in the U.S. economy.
The advance from last month’s inaugural baseline
Watch of 100.0 reflects higher ratings for the
U.S. economy, an improved outlook for business
over the next six months, and a drop in the number
of owners who say economic conditions in the country
are getting worse.
The Discover Small
Business Watch is an index of the economic confidence
of the nation’s 22 million small businesses with
five or fewer employees. The Watch, published
by Discover Business Card each month, is based
on random surveys of 1,000 small business owners
and is intended to give a voice to this critical,
trillion-dollar sector of the U.S. economy.
Driving the September 2006 Small Business
Watch improvement:
- Forty-three percent
of small business owners said economic conditions
for their businesses will improve over the next
six months, up from 35 percent last month.
- Forty-four
percent of small business owners rated the current
state of the economy as "Excellent" or "Good,"
up from 39 percent in August.
- Fifty-one
percent of small business owners believe economic
conditions in the country are getting worse, down
from 61 percent in August.
The increased
optimism was somewhat offset by cautious attitudes
with respect to hiring and investment. In the
September survey, only 11 percent of small businesses
said they planned on hiring more workers, down
from 15 percent in August, while ten percent said
they planned to lay off some workers compared
to seven percent in August. The number of companies
planning to reduce new business spending was up
from 38 percent from 34 percent.
“Clearly
small businesses are more optimistic about the
economy, but this has not yet translated into
workforce expansion or more robust spending on
business development at this point in time,” said
Sastry Rachakonda, Director, Discover Business
Card. “Although we have seen signs of some positive
economic trends currently in the news, such as
falling energy prices, small business owners are
still cautious, especially given the slowdown
of the housing market. One in three (32 percent)
small business owners feels their business would
be significantly impacted if the housing market
slows down.”
Small Business Spotlight
on Real Estate Reflects New Challenges for Realtors
In addition to generating the Index and
surveying small business viewpoints on key business
drivers, the Small Business Watch also surveys
consumer attitudes towards different segments
of the small business economy. The September 2006
survey takes an in-depth look at issues related
to real estate and realtors.
Survey data
from consumers and small business owners helps
confirm the current slowdown in the housing market.
A clear majority (68 percent) feel the real estate
market is slowing down based on the length of
time houses are on the market in their area.
Furthermore, a majority of respondents (58 percent)
are not likely to buy a new home for five or more
years, while only 11 percent were likely to buy
a home within the next six months to a year.
The
survey shows real estate overwhelmingly is a relationship-based
business. When asked about the most important
considerations when selecting an agent, nearly
half of the respondents (47 percent) said they
would choose someone they “know and trust” to
sell their home over other qualities, including
a realtor’s sales record (16 percent) and a referral
(11 percent). Additionally, a clear majority
of consumers (57 percent) said finding buyers
is the most important service a real estate agent
could provide, while only 6 percent thought it
was setting the asking price. Ninety-one percent
of the customers were very confident or somewhat
confident they know the value of their home.
Rachakonda
continued: “These results help confirm that realtors
face tremendous challenges. While real estate
is clearly a relationship-driven business, given
the slowdown in the housing market and the ubiquity
of online services, this is an industry that seems
to be under a lot of pressure right now and in
the throes of enormous change.”
Buyers
and sellers of real estate share different perspectives
when deciding between realtors and online real
estate services, according to the survey:
- Sixty-one
percent of sellers indicated they would prefer
to use an agent to sell their home, versus four
percent who would use on online service.
- On
the other hand, only 49 percent of buyers said
they would use a real estate agent for their home
search, while 22 percent would rather use on online
service.
For more information on the
Discover Small Business Watch, please visit www.discoverbiz.com/watch.
About the Small Business Watch:
The Discover Small Business Watch is
an index that measures 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 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 tandem
with each month’s Watch, Rasmussen also surveys
4,000 consumers to gauge purchasing behavior and
attitudes towards small businesses.
About
Discover Financial Services LLC
Discover Financial Services LLC, a business
unit of Morgan Stanley (NYSE: MS), operates the
Discover Card with more than 50 million Cardmembers,
and the Discover Network with more than 4 million
merchant and cash access locations. Discover
Financial Services also operates the PULSE ATM/debit
network, which serves over 4,200 financial institutions
and includes almost 250,000 ATMs and approximately
3.4 million POS terminals. For more information,
visit www.discovercard.com,
www.discovernetwork.com
or www.pulse-eft.com.
Media Contact:
Laura Gingiss
Discover Financial Services
LLC
224-405-0185
lauragingiss@discoverfinancial.com
Daniel Delson
Robinson Lerer &
Montgomery
646-805-2036
dmd@rlmnet.com
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