The Index of Small Business Optimism gave up 2.6 points in March, falling to 91.9. Four components rose or were unchanged, while six lost ground. The “hard” components of the Index (job creation, job openings, capital spending plans and inventory plans) added two points while the “soft” components (the other six in the table above) gave up 31 points. Index was driven by weaker expectations for real sales gains and business conditions and a marked deterioration in profit trends. The decline in the percent of owners expecting higher real sales and better business conditions in six months alone account for 76 percent of the decline in the Index.

It looks like everyone became more pessimistic in March. Or, perhaps, this is a ‘new normal’ and we are unlikely to see the surges usually experienced at the start of a recovery. Times are different; government, with new taxes and more restrictions, is a larger drag on the small-business community. Uncertainty continues to cloud the future while the government is persistently tone-deaf to the needs of those who create jobs and wealth. Today’s recession-level reading is, all in all, a real disappointment.

Optimism faded, and is still at recession levels. Maybe it is a “new normal”. Maybe we will not see the surges we experienced at the start of a recovery. Times are different, government is a larger drag all the time. It wants more taxes and imposes more restrictions. New York has a new bureaucracy to help new restaurant owners get through the bureaucracy. How insane! Uncertainty is still huge and it clouds the future. Leadership does not do things that make sense to those who create jobs and wealth, only to those who take it. Inflation is coming back, a little too soon with so much slack in the economy.

Although the rhetoric in Washington continues to suggest that a major reason for the slow recovery has been that banks will not lend to creditworthy borrowers, the evidence from the NFIB survey of hundreds of thousands of small firms suggests that this is not the case. The economy generated a lot of jobs by making bad loans (the housing bubble mess), and they are gone now. We could generate more jobs by making more bad loans, but the price paid will be even larger than this past recession. All through the “credit crisis”, the percent of small business owners complaining about financing problems stayed near 35 year low levels.