July's 0.9 point decline was the largest in the last three months and took the Index to 89.9, which is below the average Index reading of 90.2 for the last two-year recovery period, NFIB said.
At the two year anniversary of the expansion, the Index is only 3.5 points higher than in July 2009 - still firmly rooted in recession territory, the report added. Expectations for future real sales growth and improved business conditions were the major contributors to the decline in optimism.
The survey results weren’t all negative, however. The percent of owners (23%) citing poor sales as their top problemthe long-time primary complaint of firmswas down 6 percentage points from one year ago, and far above the survey low of 2%. Reports of sales trends were also better than a few months ago. A net negative 8% more firms reported sales trending down than up, which was still the third best reading in 42 months, NFIB reported.
However, the July survey anticipates slow growth for the remainder of the year, high unemployment rates, inflation rates that are too high and little progress on job creation.
NFIB Chief Economist Bill Dunkelberg put the responsibility for the continued poor performance of the economy on the shoulders of policy makers. “Considering the confidence-draining performance of policy makers, there is little hope that Washington will stop hemorrhaging money and put spending back on a sustainable course.”