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The Economy This Week

Small businesses struggling with cash flow; gas prices continue to hit record highs.
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Cash flow issues are putting small-business owners in a darker mood, though they continue to lead payroll growth. Here's a look at this week's economic developments and how they may affect your business.

Owner Optimism Fades

Facing ongoing cash flow issues, the outlook of the nation's small-business owners retreated further last month after improving in February, Discover reported Monday.

In a nationwide survey of 1,000 small-business owners, 77 percent said they felt economic conditions were getting worse, up from 67 percent in February. Roughly half said they experienced cash flow problems over the last 90 days, the highest level since Discover launched the monthly surveys over two years ago.

"While the passage of the economic stimulus plan last month and Fed rate cuts may have influenced February's upturn, the mood is considerably darker now," Sastry Rachakonda, director of Discover's business credit card, said in a statement.

Payrolls Inch Up

Following declines earlier this year, employers added 8,000 new jobs last month, ADP reported Wednesday.

The gains were led by businesses with fewer than 50 employees, which created 55,000 new jobs in March, according to the Roseland, N.J.-based payroll processing firm. By contrast, big manufacturers and other large businesses continued to shed jobs, reducing overall employment growth to a fraction of its pace 12 months ago.

The monthly ADP employment report is based on payroll data from approximately 392,000 companies, representing 24 million employees.

Last week, the number of new claims for unemployment benefits surged by 38,000 to 407,000, the highest level in more than two years, the Labor Department reported Thursday.

The largest increases were in Pennsylvania, Wisconsin and Georgia, while declines were reported in Michigan, Ohio and North Carolina.

Gas Prices Rise

Average gas prices rose by 3.1 cents last week to an all-time high of $3.29 per gallon, the Energy Information Administration reported Wednesday.

Higher prices were reported in every region, including a 5.7 cents hike in the Midwest to $3.249 per gallon, the sharpest regional increase. The nation's highest gas prices were on the West Coast, where prices rose by 0.6 cents last week to $3.523 per gallon, 42.7 cents higher than a year ago.

Last updated: Apr 3, 2008




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