The U.S. economy notched an important step in its long and slow recovery Tuesday with the release of the National Federation of Independent Business's survey of small businesses.
The share of firms saying that a lack of sales was their single most important problem fell to the lowest level since December 2007 — the month the recession officially began.
Businesses' sales problems are an important gauge of economic health because they provide an indication of consumer demand.
Top economic officials, such as Federal Reserve Chairwoman Janet Yellen, attribute the ongoing economic weakness to a lack of demand. In the view of the Fed, the economy is performing below potential because demand for and spending on goods and services is too low, not because supply of goods and services is constrained. That is the basis for fiscal and monetary stimulus intended to boost spending.
Yellen said in a speech about promoting job growth in March that all of the Fed's unconventional monetary easing programs "have the same goal — to encourage consumers to spend and businesses to invest, to promote a recovery in the housing market, and to put more people to work" by addressing economic "slack" — that is, a lack of demand.
Some economists, such as Amir Sufi and Atif Mian, authors of the popular book House of Debt about the recession, look to the NFIB data directly for evidence on demand fluctuations.
Only 12 percent of businesses responding to the NFIB's June survey cited sales as their single most important problem, the lowest since December 2007's 9 percent. That number had risen above 30 percent in early 2009, and remained near that level for several years as the U.S. shed millions of jobs.
As worries about slow sales have receded since then, concerns about taxes and regulations have risen in importance.
Other aspects of the NFIB survey contained more good news. The overall index of small business optimism rose to the highest level since September 2007. There were clear signs that the labor market is tightening: Both the number of businesses saying that they had job openings they were not able to fill and the number saying that there were not enough qualified applicants for jobs were the highest since 2009.
Those developments were reflected in the number of businesses saying that the quality of workers was their biggest problem:
The NFIB survey's hints of a strengthening economy and accelerating job creation were consistent with the Bureau of Labor Statistics' report Tuesday morning that job openings reached a pre-recession level in April.
Both reports lend evidence to the Federal Reserve's statements in recent months that the economy and labor market are improving enough to justify the Fed slowing down its large-scale bond purchases over the course of the year.