American Express OPEN--the small business wing of AE--says small business owner optimism has plunged to 48 percent from 64 percent a year ago. Capital investment plans are at the lowest point since OPEN started monitoring.
Christopher Hildreth is having a rough day. He owns a custom flooring business in San Francisco called Tree Lovers Floors with his ex-wife, Janet, and for the first time in the company's 36-year history, people are getting pink slips today. Half the staff of 40 is being let go. Because Tree Lovers creates custom flooring, they charge a premium.
But, in this economy, "choices have been made to go with the cheaper guy." Hildreth has been through downturns before, but he and his ex figured they could tap into their credit lines to keep the firm afloat. That's when they discovered it's different this time. The credit is no longer there. "We had a credit line of $30,000 with American Express, and we got a letter last week saying it's down to $1000," he says, "which is not a credit line."
The $250,000 home equity credit line they were counting on has also evaporated. Now Hildreth is taking a loan on his life insurance annuity to cover the remaining payroll. He's cutting his own salary and cutting prices back to where they were seven years ago. "I've always paid my debts," he says, but he's learned that doesn't matter. "We're gonna have to make some tough choices."