MINNEAPOLIS--(BUSINESS WIRE)--The government shutdown has clearly impacted small business ($100K-<$10MM) and middle market ($10MM-<$500MM) economic confidence in the fourth quarter of 2013. For the first three quarters of 2013, optimism appeared to be growing. However, there were signs of uncertainty about the future (e.g., decreased sales expectations and industry confidence). Some of this uncertainty came to fruition during the fourth quarter. With optimism delayed for the time being, economic growth will likely be anemic.

The need for additional credit diminished in small business and remained flat in middle market. In small business, not only has credit demand been depleted, but of those that applied, denials have increased. In the middle market, credit appetite has slowly decreased, but among those that have applied, approvals have remained high and consistent.

"Uncertainty in the economy and about the future of their companies will likely overshadow positive momentum in small business,” says Ray Johns, Managing Partner, Barlow Research.

Other important results from the fourth quarter 2013 Economic Pulse report:

• Confidence in the U.S. economy and in the financial condition of their company decreased in small business and the middle market.
• The percentage of middle market companies that did not currently need credit or did not borrow remained elevated in both small business and middle market while credit applications decreased in small business.
• Most small businesses and middle market companies anticipate having cash reserves over the next 12 months; middle market companies were more likely to invest in capital expenditures or distribute cash reserves to stakeholders.

“Anticipate increased pressure on loan portfolios as companies pay down debt and show low levels of demand for additional credit,” Bernie Kuechler, Director of Data Analytics, Barlow Research.

About Barlow Research Associates, Inc.:

Barlow Research Associates, Inc., founded in 1980, provides research and consulting services to the banking industry in the U.S. and overseas with specialties in custom research, strategic consulting and syndicated research programs for small business, middle market and business Internet banking.

For more information on the study, contact Bernie Kuechler, Director of Data Analytics at bkuechler@barlowresearch.com or 763-253-1830.