P7_How_to_Make_Small_Business_Owners_More_Optimistic -...

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Viewpoint October 5, 2010 How to Make Small Business Owners More Optimistic Their confidence is at record lows. Because they're so important to the economy, policy should encourage positive expectations, says Scott Shane By Scott Shane Economic performance is largely a self-fulfilling prophecy. If business owners believe that the economy will get better in the future, they act in ways that lead to economic growth: They buy products, hire employees, expand inventories, and make investments. If they don't, well, we know what happens: Few take those actions that are crucial to growth. While everybody's optimism matters, from rank-and-file workers to Fortune 500 company executives, small business owners' outlooks are of particular importance because their businesses account for more than half of nonagricultural private economic production in the U.S., according to the Small Business Administration. Without expansion in this sector, economic growth is anemic at best. Statistical analysis confirms this view, showing that the level of small business optimism is a solid predictor of future growth. Unusual Pessimism At the moment, small business owners are very pessimistic. In September, Discover Card reported that its Small Business Watch confidence index,
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P7_How_to_Make_Small_Business_Owners_More_Optimistic -...

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