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Bank One Economist Views Pricing Power as Driver for Small Business Growth CHICAGO, May 19 /PRNewswire-FirstCall/ -- The ability to ratchet up prices gives nimble small businesses an edge over large corporations as the economy surges, fueling continued expansion and optimism, according to Bank One Senior Economist Peter Glassman. (Logo: http://www.newscom.com/cgi-bin/prnh/20030116/NYTH053LOGO ) "Sales are up, profits are up, prices are up and hiring is up," Glassman wrote in the latest issue of Bank One's Small Business Review, a quarterly report on the economic outlook for small business owners. Bank One's Small Business Review analyzes a quarterly survey conducted by the National Federation of Independent Business, then provides an economic explanation for the results, along with implications of the findings. The review also offers a monthly checklist to help small businesses manage their finances for growth. Small businesses are raising prices During the past three months, small businesses raised prices at the broadest level in 15 years; 22 percent flexed their pricing power. Additionally, 27 percent of small businesses surveyed plan to raise prices during the next three months, up from 20 percent in the first quarter and 15 percent one year ago. Rising energy prices certainly contributed to price increases, but prices rose across the board at a level much higher than the historical average, Glassman said. Unlike large businesses, small businesses can gauge customer response to price increases quickly, making them more flexible. "Small businesses could fuel higher inflation for the U.S. all on their own," he wrote. Capital spending, hiring plans strong Capital spending plans for the next three to six months remain strong at 34 percent of those surveyed, tied for the best quarterly number since the first quarter of 2000. Changes in tax laws that raised the depreciation deduction make buying vehicles and equipment more attractive. "We've now seen four straight quarters of significant increases, with more on the horizon," Glassman wrote. Small businesses will remain a hiring engine in the near-term as 14 percent plan to add workers over the next three months. This is slightly below the 17 percent expected in the first quarter but well above the 8 percent level recorded a year ago. "Even better news is that job openings continue to increase," he wrote. "Small-business employment has grown considerably, keeping the national unemployment rate much lower than would otherwise have been the case." Credit conditions stay friendly Interest rates may be rising, but they remain low historically, and credit conditions remain friendly on the whole. The Federal Reserve is expected to raise rates but remain accommodative. "At this point, rates are only going up. Small businesses would be wise to lock in their financing at today's rates even if they won't use it for a while," Glassman wrote. For more details, contact Mary Kay Bean at 313-225-2831 for a copy of the second quarter edition of Small Business Review, or see it online at http://www.bankone.com/economics . About Bank One Bank One Corporation (NYSE:ONE) ( http://www.bankone.com/ ) is the nation's sixth-largest bank holding company, with assets of $320 billion. Bank One currently has more than 51 million credit cards issued, nearly 7 million retail households, approximately 500,000 small business customers, and approximately 20,000 middle market customers. It also manages $188 billion of clients' investment assets. http://www.newscom.com/cgi-bin/prnh/20030116/NYTH053LOGO http://photoarchive.ap.org/ DATASOURCE: Bank One Corporation CONTACT: Mary Kay Bean, Media Relations, +1-313-225-2831, or Peter Glassman, Senior Economist, +1-312-723-7849, both of Bank One Corporation Web site: http://www.bankone.com/ http://www.bankone.com/economics

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