Visa Small Business
Economic Insights Point To Increased Confidence And Positive Conditions For Small Business Owners.
Continued Growth Expected for Small Businesses in California and Western United States. SAN FRANCISCO, December 1, 2005
Source: Visa News Room The National Federation of Independent Business (NFIB) and Visa USA, two of the nation's leading small-business advocates, today released research findings that provide a compelling snapshot of economic conditions facing business owners and a projected outlook for the coming year. Consumer and business spending through November 2005 indicates that small business growth remains strong nationwide and in the Western region of the United States. The findings were released at the "Small-Business Economic Insights Series" held in San Francisco today that explored economic factors that impact business operations, activities, and planning for business owners in California and the United States. As part of the Small-Business Economic Insights Series, NFIB and Visa have brought together new economic data and insights, ranging from small-business forecasts to consumer spending trends. These consumer and business spending statistics are a key indicator of small-business conditions and should help business owners anticipate market trends, navigate challenges, and realize opportunities. National Conditions Small-business owners who attended today's event gained valuable insights regarding the economic outlook, including broader financial conditions and spending trends. These conditions and trends are based on NFIB's Small-Business ConditionsSM report, the Visa Commercial Consumption ExpenditureTM (CCE) Index -- the first financial metric to standardize how business and government spending is tracked within the United States -- and SpendTrak, a proprietary analysis of consumer spending patterns on Visa cards. Findings in the 26 largest economy states surveyed by NFIB indicate: More than one in three small-business respondents (37 percent) stated business conditions in their market areas are "good." Nearly half (42 percent) of respondents reported that sales are "good," while 57 percent cited their sales prospects for the next three months as a reason for being optimistic when looking ahead. "Small businesses are known for their resilience, as shown by our latest survey results," said Nigel Ives, vice president, western region, NFIB. "Despite fluctuations in energy prices and the potential effects of recent disasters on the economy, small-business owners are looking at their prospects for the future, and they like what they see." Visa's CCE and consumer spending data offers a snapshot of actual purchasing behavior that reinforces the small-business owners' optimism as presented in NFIB's survey results. Strong consumer spending continues throughout the United States, with spending on Visa cards totaling $758 billion for the period from Jan. 1, 2005 to Oct. 31, 2005. This total represents a 12.7 percent increase over the same period last year. Discretionary spending on Visa cards, a key indicator of consumer confidence, continues to increase. For example, spending in the travel and entertainment sector rose by 14.4 percent for the period from Aug. 8, 2005 to Nov. 13, 2005, while spending in the home furnishings (12 percent) and home and garden (21.1 percent) segments also grew. Non-payroll spending by U.S. business and government agencies will continue a pattern of solid growth, increasing an estimated 6 percent in 2005 to $16.2 trillion and expanding further to reach $17.2 trillion by 2007, according to Visa's CCE analysis. Small business spending continues to outpace the growth of larger companies with the retail trade, wholesale trade and manufacturing sectors reflecting the largest share of small-business spending by industry segment. "An understanding of consumer and business spending patterns can help small-business owners as they seek new ways to reach their customers," said Wayne Best, senior vice president, business and economic analysis, Visa USA. "Consumers in the Western United States continue to experience strong economic growth, even stronger than the rest of the nation. Higher home values, increases in job stability, and wage growth have all provided them with more discretionary income, which they are electing to spend at department and home and garden stores, as well as on travel and entertainment." Business Conditions in California NFIB's Small-Business ConditionsSM report revealed the following findings for California: Nearly half (41 percent) of respondents in California stated business conditions are "good," compared to 37 percent nationally. In addition, 10 percent see conditions improving during the next three months, compared to 8 percent nationally.
In California, 59 percent of small businesses stated prospects for their businesses during the next three months to be "good," similar to national expectations (57 percent).
When asked the reason for why they are optimistic, almost half (42 percent) of small-business owners in California cited positive sales prospects, which is in line with the national average of 42 percent. Visa's SpendTrak findings indicate that consumer spending in the Western region outpaces spending nationwide: Consumers enjoy access to more discretionary income. The increase in home valuations is a key contributing factor to this rise in discretionary income.
Discretionary spending for the period from Aug. 8, 2005 to Nov. 13, 2005 grew in several sectors, including: home and garden (24.5 percent), travel and entertainment (15.9 percent), home furnishings (14.2 percent), and department stores (8 percent).
Overall consumer spending in the Western region (Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming) outpaced the nation at 13.1 percent growth for the period January 1, 2005 to October 31, 2005. Economists and Business Leaders Address Strategies for Small-Business Growth At today's event, some of the nation's foremost business leaders and economists provided commentary on these economic trends and offered advice to help inform business owners' 2006 planning. Guy Kawasaki, author, columnist, and managing director of Garage Technology Ventures, delivered a keynote address on how entrepreneurs can accelerate business growth and adapt to changing marketplace dynamics. Kawasaki's presentation was followed by a panel discussion on the national and regional business outlook, as well as trends in consumer and business spending. Participating in the panel were William Dunkelberg, chief economist, NFIB; Lawrence McQuillan, director of business and economic studies at the Pacific Research Institute; and Wayne Best, senior vice president, business and economic analysis, Visa USA. About NFIB Economic Trends Study and Small Business Conditions As the nation's largest small-business advocacy group, the NFIB is continually monitoring economic conditions impacting, as well as the attitudes of, its 600,000 small-business members through its ongoing quarterly Economic Trends Study and recently launched Small-Business ConditionsSM reports.
About Visa Commercial Consumption Expenditure
Visa's Commercial Consumption Expenditure (CCE) index is the first financial metric to standardize how business and government spending is tracked within the United States. Created by a team of Visa research and economic experts, CCE draws on government data that uses methods similar to those used in calculating the Personal Consumption Expenditure (PCE) index, which annually monitors consumer-related spending. By using measures from the Bureau of Economic Analysis and the Census Bureau, CCE offers an unbiased and consistent way to monitor business expenditure within the United States that is consistent with gross domestic product accounting. CCE is comprised of four key data elements, including intermediate inputs, wholesale and retail purchases, private fixed investment, and government spending. The small business spending forecast incorporates the broader CCE data set, as well as proprietary data provided by Global Insight. About Visa SpendTrak Visa SpendTrak provides insight into consumer spending behavior. Based on proprietary data, this report presents timely statistics based on approved authorizations of Visa-branded credit, debit and commercial cards in key market segments. Growth comparisons are to the same period from the prior year. Growth in Visa volume reflected in the SpendTrak report is the result of two major factors: increased spending by consumers and businesses; and the overall migration of spending from paper forms of payment (cash and checks) to electronic forms. Visa makes every effort to use reliable information in preparing this release, but Visa makes no representation that they are accurate or complete. Visa's predictions about the future performance of the economy and consumer spending are based on assumptions that may not be realized. About National Federation of Independent Business The National Federation of Independent Business (NFIB) is the nation's largest small-business advocacy group. A nonprofit, nonpartisan organization founded in 1943, NFIB represents the consensus views of its 600,000 members in Washington, D.C. and all 50 state capitals. More information is available online at NFIB.com/newsroom. About Visa USA Visa USA is the nation's leading payment brand and largest payment system, enabling banks to provide their consumers and business customers with a wide variety of payment alternatives tailored to meet their evolving needs. Visa USA is committed to increasing the choice, convenience, acceptance, and security of Visa payments for all stakeholders in the payment system - Members, cardholders and merchants. Through its 13,420 Member financial institutions, more than 488 million Visa-branded cards have been issued to cardholders in the United States. Last year, U.S.-based financial institutions relied on Visa's processing system, VisaNet, to facilitate $1.3 trillion in transactions with unparalleled reliability. Worldwide, cardholders in over 150 countries carry more than 1 billion Visa-branded cards, accounting for more than $3 trillion in annual transaction volume. Visa offers a trusted, reliable and convenient way to access and mobilize financial resources -- anytime, anywhere, anyway.
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