Small Talk: Not out of the woods yet

These days everybody is talking about a financial recovery, but a new Wells Fargo and Gallup study shows small business owners remain skittish.

Even with the recent positive news that the jobless rate had dropped from 10 to 9.7 percent, the study – conducted on January 22 – showed virtually no change in small business optimism from the last report in October.

The Wells Fargo/Gallup Small Business Index optimism score came in at -16, which was down one point from October 2009 and reflects an overall negative outlook by small business owners on their companies. A zero score would indicate that small business owners have a neutral opinion about their outlook.

The report is compiled from telephone interviews with 605 U.S. small business owners and the results are tabulated from a formula that scores and sums the answers to 12 questions – six about the present situation and six about the future. Respondents were asked about their financial situation, cash flow, revenues, capital allocation spending, job hiring and credit availability.

Even last month’s U.S. Commerce Department report that showed 2009 fourth quarter Gross Domestic Product grew at the fastest pace in six years, was not enough to brighten the spirits of small business owners, of which 42 percent said their cash flow was somewhat poor or very poor for the last 12 months, up from 36 percent during the last quarter.

Green shoots — where!?

Small business owners in the U.S. may be pleased to hear that some of their brethren are feeling a bit more optimistic about the future. The fresh sliver of positive news arrived in inboxes across the country Monday and shows confidence among small business owners in the U.S. appears to be headed up, albeit not entirely out of the gutter.

The Discover Financial Services survey, part of its Small Business Watch program, shows the number of small business owners who see the broader U.S. economy improving jumped to 31 percent in April, up from 16 percent in March. That’s the highest level for that measure in two years.

While the survey showed some small business owners growing more optimistic, 51 percent still see worse economic times ahead. And the pessimism doesn’t stop there. A whopping 91 percent of small business owners rated the current U.S. economy as “poor” or “fair,” and that’s the measure that’s stayed constant for the last eight months.