One of the most valuable insights I learned in Economics 01 was the notion that money and markets are guided by human decisions. A contented population with the ability to access and circulate information will generally be prosperous, too. This is, I believe, all that’s needed to understand why some of the most benighted areas of the world are nevertheless rich in natural resources. Such people have no hope that anything will ever improve for them.

But that’s not my point. This is: Anxiety, which is often supported by bad or incomplete information, can undermine an economy. Anxiety breeds fear and false impressions.

Today I was sent a summary of a market research effort that indicates only 25% of small manufacturers (owners and managers) nationwide plan to expand their business in the next 12 to 24 months. In the first half of this year, 29% of those surveyed in a comparable poll had growth plans.
There are other details in the study that are less ominous, but how about this: Of the more than 800 small businesses participating in this quarterly nationwide poll, the “confidence index” dropped from 40.3% in the second quarter of 2007 to 38.33% during the third quarter.

Certainly, there are other factors to watch in making an economic forecast, but without “confidence” there’s really not much else to build upon.

Over the past two months FM&T has been conducting a survey of our readers’ business outlook for 2008. The results will be presented in our December issue, and it may provide a nice counterpoint to this study.  But I’m not getting my hopes up, yet.