Weaker sales and higher costs are pushing the economic outlook of the nation's small-business owners to recession levels. Here's a look at this week's economic developments and how they may affect your business.

Small-Business Optimism Plunges

The nation's small-business owners continued to fret about higher prices and lower sales in May, dragging their economic outlook down to recession levels, the National Federation of Independent Business reported Tuesday.

Based on a survey of its members, the Washington-based trade group's monthly small-business optimism index dropped 2.2 points last month to 89.3, its lowest reading since 1980.

Seven of 10 index components declined in May, including a downturn in hiring and spending plans. More owners also reported weaker sales and higher employment costs.

"Clearly the economy is weak compared to six months ago," William Dunkelberg, the group's chief economist, said in a statement.

Retail Sales Up

Extra spending cash from federal tax rebate checks gave retailers an unexpected boost in sales last month, the Commerce Department reported Thursday.

Retail sales rose by one percent in May to $385.4 million, including a 13.8 percent increase in gas station sales alone. Excluding gas, sales rose by 0.8 percent, the sharpest increase in six months, the report said.

Jobless Claims Rising

The number of new claims for unemployment benefits rose by 25,000 last week to 384,000, the Labor Department reported Thursday.

The advance seasonally adjusted insured unemployment rate the previous week rose by 0.1 percent to 2.4 percent, reflecting some 3.139 million people filing jobless claims.

The biggest increases in new claims last week were in Texas, Oregon and Tennessee, while decreases were reported in California, Michigan and Florida.