After two consecutive quarters of increased optimism, the latest Wells Fargo/Gallup
Small Business Index survey reveals a decline in small business owner optimism from
levels measures at the beginning of the first quarter.

Conducted April 4-8, the newest Index score dropped 12 points from last quarter and
now sits at a score of zero indicating that small business owners, as a group, are
neutral -- neither optimistic nor pessimistic -- about their companies’ situations,
says Wells Fargo.

Credit availability concerns remain unchanged with about one-third reporting that
obtaining credit would be somewhat or very difficult. Fewer business owners
demonstrate confidence in their financial situation, revenues and cash flow over
the next 12 months.

“Weaker U.S. consumer spending in the first quarter, along with a spike in energy
prices, is likely behind much of the slide in small business optimism since January,”
says Scott Anderson, Wells Fargo senior economist. “On the bright side, for the
second quarter, optimism remains above the negative territory we experienced
throughout 2009 and 2010.”

The Index is the sum of the “present situation” (previous 12 months) and “future
expectations” (next 12 months) of business owners for six key measures, including
financial situation, cash flow, revenues, capital spending allocation, job hiring
and credit availability.

The present situation declined slightly to negative 14 (-14) from negative 10 (-10)
driven primarily by declines in financial situation and cash flows. The present
situation score has been in negative territory since the first quarter of 2009.

Despite an eight-percentage point decrease from 22 in January to 14, the future
expectations component of the Index remains in positive territory, says Wells Fargo.
The decline was driven by decreased expectations for financial situation and cash
flows.

“Business owners entered the New Year with increasing optimism, but it appears that
slow economic growth is interfering with that momentum,” says Doug Case, Wells Fargo
small business segment manager. ”Without clear signs of sustained economic growth,
businesses remain cautious, and that caution translates into reduced hiring and
expansion.”