Small Business Index numbers fall to 8-year low

High health care and energy costs coupled with the regional devastation caused by recent hurricanes are creating a poor climate for small business growth, according to a study released today by the House Committee on Small Business.

The Small Business Index reached an eight-year low of 69.99 in the third quarter of 2005, said Rep. Nydia M. Velazquez (D-N.Y.) today at a press conference announcing the index's release.

Velazquez, the ranking Democrat on the House Committee on Small Business, called on President Bush and the Republican controlled Congress to provide relief to small businesses through tax cuts and a more friendly energy policy. Velazquez also suggested a series of grants to small businesses.

"The same way did with the airline industry, we bailed them out," she said. "That's the same thing we need to do for small businesses."

The index comprises 17 different economic indicators, including health care costs, natural gas and oil costs, and unemployment and interest rates. Indicator changes are used as the basis for calculating the index.

The new report suggests the primary factors for the dip in the index are increases in oil and natural gas prices, a rise in interest rates, challenging economic conditions in rural America, rising health care costs, a downturn in business optimism and an increase in business inflation.

Other factors have countered the negatives, including an increase in manufacturing activity, stock market gains and an increase in commercial lending and venture capital investment, according to the index report.

The Small Business Index, which is released on a quarterly basis, was first produced by the Committee in 2003, but past data was calculated back to 1998. In the first quarter of 2005 the index was at 71.23, and then fell to 70.84 in the second quarter. An all-time high of 109.11 was reached in 2000.