San Francisco Examiner, December 5, 2005

Visa research indicates strong holiday season

The recent good news on the U.S. economy’s growth in jobs and gross domestic product is being echoed by a survey released by the National Federation of Independent Business showing business people are feeling increasingly positive about the economy.

The NFIB’s “optimism index” — a survey of 1,200 independent business owners — examines attitudes on the economy, hiring trends, expansion plans, inventories, financing and staffing levels.

NFIB economist William Dun- kelberg said the most recent quarterly data reported in October ranks as one of the high points of the survey, which dates back to 1973.

Of the more than 120 quarters measured in the history of the survey, optimism about the economy has only measured stronger about 10 times, Dunkelberg said. He noted the index has consistently predicted the state of the economy three to six months in advance.

“Our message has been consistent,” Dunkelberg said. “The economy is good and is staying good. Some of the gloomy forecasters have wavered, but we have continued to prove them wrong.”

The NFIB’s report was presented to a group of San Francisco business people, along with re- search showing Visa USA’s consumer debit and credit card spending grew nearly 13 percent in the first nine months of 2005.

The Foster City company’s report showed spending on Visa cards totaled $758 billion from January to Oct. 31, compared to $662 billion for the same period of 2004.

“It’s growing at a very strong pace,” said Wayne Best, senior vice president, business and economic analysis at Visa. “Given the employment gains we have and the high levels of consumer confidence, all indications are that consumers feel comfortable about their financial conditions and are not worried about being laid off.”

The economists underscored the good news offered by two major government reports. Last week, the Department of Commerce reported that the economy grew at an annual rate of 4.3 percent during the third quarter while the Bureau of Labor Statistics reported that the nation’s employment grew by 215,000 jobs in November. The unemployment rate was unchanged at 5 percent.

The Visa research also showed that spending in personal entertainment, travel, specialty apparel stores and home and garden has been particularly strong during the month of November.

“It indicates a strong holiday season,” Best said.

The NFIB’s research showed 59 percent of small businesses in California believe their prospects for business during the next three years are good. However, the state’s independent businesses were decidedly less sanguine about whether the state’s business climate is supportive.

Lawrence McQuillan, director of business and economic studies at the Pacific Research Institute, San Francisco, said California ranked 49th among the 50 states in a study examining business friendliness.

“The U.S. Economic Freedom Index,” completed in November 2004, looked at more than 100 different variables, including public policy, tax rates, labor and environmental regulations and red tape, McQuillan said.

In California, the most important recent changes bettering the business climate have been the workers compensation insurance reforms, he said.