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 Discover(R) Small Business Watch(SM): Small Business Economic Confidence
                          Tumbles to 18-Month Low

3 Out of 4 Small Business Owners Say Economic Conditions in Country Getting Worse;
            Economy Rates as Most Important Issue in Presidential Race

  Health Care Poll: 77% of Small Business Owners Do Not Offer Health Insurance to

RIVERWOODS, Ill.--(BUSINESS WIRE)--Jan. 28, 2008--Few small business owners
started out the year with confidence in the direction of the U.S. economy, according to
the Discover Small Business Watch. The monthly index fell nearly 6 1/2 points in
January to 86.3, the second-largest point tumble in the 18-month existence of the poll.
The index has been steadily decreasing since July, when it was 107.3.

"We have a significant increase this month in the number of small business owners who
think the overall economy is getting worse," said Sastry Rachakonda, director of
Discover's business credit card. "Cash flow has dipped and spending on business
development is down, which causes concern in this sector. However, the numbers that
measure owners' confidence in their own businesses have been fairly constant. It is too
early to tell whether any of the proposed stimulus plans are affecting the mood of the
small business segment of the economy."

January Key Findings:
   •   74 percent of small business owners feel that economic conditions in the U.S.
       are getting worse, a jump from 65 percent who felt that way in December.

   •   44 percent said they have experienced cash flow issues over the last 90 days,
       also a slight increase from 42 percent in December but significantly more than
       the 32 percent in January 2007.

   •   35 percent of small business owners picked the economy by far as the most
       important issue in the presidential campaign. The war in Iraq was a distant
       second at 14 percent; followed by government ethics and corruption, 13 percent;
       immigration, 11 percent; health care, 9 percent; national security, 8 percent;
       Social Security, 4 percent; and some other issue, 2 percent. Six percent were not

   •   26 percent of small business owners rate the U.S. economy as excellent or good,
       which is lower than the 29 percent in December who felt the same, and the
       lowest since surveying began in August 2006.
Poll: Few Small Business Owners Offer Healthcare; High Costs Hamper Growth

Healthcare costs continue to be a financial burden for small businesses, according to
this month's poll, which found that 77 percent of small business owners do not offer
health insurance to their employees, up from 74 percent last year.

Thirty-nine percent of small business owners said that the cost of health care has a
major impact on their ability to grow, while seven out of 10 said that obtaining affordable
health insurance for themselves and their employees was very difficult (51 percent) or
somewhat difficult (18 percent).

"Healthcare costs were having a big impact on businesses when we did this survey one
year ago," said Rachakonda. "This year's survey shows that the situation has only
worsened. Nearly four out of 10 entrepreneurs feel that healthcare costs have a major
impact on their ability to grow."

Key Healthcare Poll Findings:
•   25 percent of small business owners said they are currently uninsured, up from 18
    percent who said the same last year.

•   Only 15 percent of small business employers offer health insurance to their
    employees. Of those, 40 percent have considered discontinuing it because the cost
    is too high - a number that increased from 33 percent last year.

•   Among those small business owners who do have healthcare coverage, 27 percent
    are insured by another family member's plan, while 35 percent have purchased
    coverage separately.

•   34 percent of small business owners said their employees go without health

"Small business owners have to be flexible and resourceful to find health insurance for
themselves and their families," Rachakonda said. "But for those whose spouses don't
have health benefits, or for those who can't afford to purchase a plan, they are simply
going without."

Small businesses that cannot find a way to provide health insurance for their employees
should expect to have a more difficult time recruiting talent. In a survey of 4,000
consumers, 49 percent said that health benefits were very important to them when
seeking employment, while another 23 percent said coverage somewhat important in
their decision to select a new job.

The views and opinions expressed by small business owners and consumers who
participate in the Small Business Watch survey are their own and do not necessarily
reflect those of Discover Financial Services or its affiliates.
About the Small Business Watch

The Discover Small Business Watch is a monthly index measuring the relative economic
confidence of U.S. small business owners who employ less than five employees, a
segment that consists of 22 million businesses producing more than a trillion dollars in
annual receipts. The Watch is based on a national random survey of 1,000 small
business owners. It is commissioned by the Discover Business Card, which strives to
offer the best business credit card for American small businesses, and is conducted by
Rasmussen Reports, LLC (, an independent survey
research firm. The numeric index is calculated by assigning values to responses to a set
of six consistent questions. The base value of the Watch was established at 100.0 based
on surveys conducted in August of 2006. In addition to generating the index, the Small
Business Watch surveys small business viewpoints on key business drivers, and also
surveys 4,000 consumers to gauge purchasing behavior and attitudes towards small
businesses. For past results and small business survey data, visit For information on Discover Business Card,

About Discover Financial Services

Discover Financial Services (NYSE: DFS) is a leading credit card issuer and electronic
payment services company with one of the most recognized brands in U.S. financial
services. The company operates the Discover Card, America's cash rewards pioneer.
Since its inception in 1986, the company has become one of the largest card issuers in
the United States. Its payments businesses consist of the Discover Network, with
millions of merchant and cash access locations, and PULSE, one of the nation's leading
ATM/debit networks. Discover also operates the Goldfish credit card business in the
United Kingdom. For more information, visit

CONTACT: Discover Financial Services
Jon Drummond
Robinson Lerer & Montgomery
Daniel Delson
SOURCE: Discover Financial Services

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