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Small Business Optimism Stagnates (Even Before Higher Taxes)
Via Lance Roberts of Street Talk Live,
The release of the National Federation Of Independent Business (NFIB) Small Business Survey for December was much like the report we discussed in November. In short - there were very few positives to be found.
According to the NFIB survey optimism among small businesses crept higher by 0.5% over November's historically low report with a reading of 88.0 which is the second lowest reading since March of 2010. This poor report showed continued deterioration in the labor market, or employment, components and in the surprising number of owners who expect businesses conditions to worsen in the next six months.
The outlook for economic strength is important as it reflects on actions taken by businesses owners primarily in regards to future employment and capital expenditures. The chart below shows the 3-month average of firms expectations of economic improvement (currently at the LOWEST level on record of -22.67%) compared with expectations of future employment and capital expenditures.
With the decline in economic expectations the most recent report showed reductions in inventory demand, continued concerns about future capital expenditures and not surprisingly job creation plans deteriorated sharply.
According to the NFIB survey: "Overall, owners reported a tiny increase in job creation, adding an average of 0.03 workers per firm, better than November’s -0.04 reading, but both roughly '0'. The percent of owners reporting hard to fill job openings fell 1 point to 16 percent of all owners. This measure is highly correlated with the unemployment rate, so the NFIB survey anticipated little or no improvement in the rate. Job creation plans weakened substantially, falling 4 points to a net 1 percent planning to increase employment."
The chart below shows the high correlation between employment and the NFIB's job creation plans. This doesn't bode well for continued employment expansion.
Importantly, the increases in payroll taxes from the recent "fiscal cliff" resolution could have a greater impact on consumption than expected in the months ahead. With "poor sales" and "taxes" being two, of the top three, concerns by small businesses currently - it is unlikely that there will be any substantial improvement in economic outlooks in the months ahead.
"Seventy percent of the owners characterize the current period as a bad time to expand; one in four of them cite political uncertainty as the top reason. This 'uncertainty' is likely to be a headline player for at least the first half of 2013. As the year progresses, those looking for some meaningful progress on the deficit are likely to be disappointed. Spending will not be cut in any substantial way. Many new 'taxes' will be imposed. The Federal Reserve will keep financing the deficit, continually expanding its portfolio. Eventually the Federal Reserve will be able to declare victory (unemployment rate at 6.5%) even if its policies are benign or even mildly counterproductive."
As we stated in last month's report:
"The uncertainty surrounding the economy that currently exists limits the ability for businesses to plan...For businesses their outlook is driven by those silly little economic factors like supply, demand and profits.
It is important to view this report from the perspective of the business owner. Business owners are some of the best allocators of capital and resources. They spend money to increase production, expand facilities and hire employees to meet increasing demand. They operate within the confines of the real economic environment, rather than theory, and the results of the recent election point to a tougher economic climate ahead.
Until there is an improvement in the uncertainty that surrounds the economy there is likely very little headway that will be made in the months to come. While further stimulative programs may boost asset markets in the near term it is unlikely that the engines of economic growth will kick in until debt levels are reduced, tax policies are clarified and the regulatory environment is cleared."
The current survey was completed prior to the last minute "fiscal cliff" deal that raised taxes on small business owners and employers. It is unlikely that higher tax rates will spur businesses to expand employment, make capital expenditures or increase production. Furthermore, with the resolution to the upcoming debt ceiling likely resulting in few, if any, real spending cuts the worries about future economic strength will likely persist.
The January survey will be very telling as to the perceived impact of the new tax rules on small businesses. Overall, there is really very little positive to point out in the most recent report. The environment within which small businesses operate doesn't seem to be improving currently.
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bullish.
Whadaya mean "Stagnates" everyone I know is down right DEPRESSED about their small businesses.
Long Ammo
the prices for ammo are getting crazy on places like armslist. can't wait to see the prices when(if?) the ammo sellers start restocking and selling.
Well, my wife is fucking pissed because I maxed out the credit card in order to buy a shitload of Amway. Now I see that I was supposed to buy ammo with the money and I'm stuck with all of these cleaning supplies........
(Sign on fence in front yard) "Due to the high price of ammunition, NO warning shots will be fired."
That's exactly what the govt wants. During the American revolution, over 2/3 of residents of the 13 colonies were small business owners, that number has more than reversed. More people employed by large corporations and the govt itself makes them easier to control, and makes it easier to take away their livelyhood if they step out of line.
The certainty of misery is better than the misery of uncertainty.
Small business has been screwed for a long long time.
The Too-Bigs have literally taken over the world.
It's like a bad science-fiction novel.
http://www.angrysinner.blogspot.kr/2013/01/wednesday.html
The official recession calls are bunk - government borrowing and spending are not direct inputs to any reasonable measurement of production.
Nothing several Trillion more dollars of Federal Reserve fiat shoe horned into the Too Big To Fail banks won't solve.
<NOT>
Liquidity injections will boost confidence. More ZIRP flowing to the bankers will juice the markets and juiced markets produce wealth effect, wealth effect boost confidence and consumers spend. This consumer spending boost the bottom line for small business. So the Federal reserve is running the right policy to boost the economy and spread the wealth.
Employment will jump, incomes will rise and another round of growth will follow. All that is needed is more money printing and liquidity flow to the finaical serivces sector and big trading concerns.
So small business owners are fretting over "uncertainty". What's uncertain for them?
Well, I'll give them certainty:
1. More regulation
2. More health care taxes
3. Fewer customers
4. More inspection and IRS scrutiny
5. Higher commodity prices
What are they uncertain about?
Doug Kass & Byron Wien: Stocks Will Hit Their High For The Year By The End Of This Week. S&P 500 Earnings Are Going To Be Down Year Over Year. Too Many People Making Too Much Stuff Out There. ... The World Competitive Environment Is Too Intense.
http://investmentwatchblog.com/doug-kass-byron-wien-stocks-will-hit-their-high-for-the-year-by-the-end-of-this-week-sp-500-earnings-are-going-to-be-down-year-over-year-too-many-people-making-too-much-stuff-out-there-the/
Hey Tyler. Do you remember that spray on shit, when we played "PeeWee" Football? Firm Grip ®
If small business is suffering, why is the Russell 2000 soaring? Total disconnect between the article and the reality of market investment.
sunny
There are a lot more than 2000 small businesses in the US. But probably not for long.
Correctomundo, NoDebt. Any of the Russell 2000 are way bigger than the "small businesses" that are referenced in the survey. Most small businesses are privately owned, and not even found in the pink sheets.
The minute that "small business" became the hot topic of federal legislators, it was all over for them. They are getting "helped" to death.
It's why the phrase "I'm from the government and I'm here to help" is death to anyone who's heard it. Elephants trying to help ants usually just gets a lot of ants squished.
Actual real world result- when they start to care about you it's for only one reason- to take your money.
If small business is suffering, why is the Russell 2000 soaring? Total disconnect between the article and the reality of market investment.
It's called corruption, layoffs, outsourcing and SKYNET and ZIRP fiat.
Who needs small biz when we have a global monopoly?
Welcome to "depressflation".
and they wonder why small business owners, despise public employees
Ahh, Otool care, disinformation> This is for Buzz! That Man kicks ASS! "Driving With the Top Down" Driving With The Top Down - Iron Man Soundtrack - YouTube
Cash Advances on business credit cards at all time high. 70% cannot get out of the "rollover" loop. We process for 17 business types, all 17 are down, all of them. Backing up risk models, revenues down 25% in the past eight weeks, something is happening.
Eight weeks? The stolen reelection with election fraud in the swing states. People have given up. Many business are closing and people have stopped spending money. Sad.
I know several suppliers of mine that have been living off credit cards since 2008.
Two gave up last month and declared bankruptcy,business and personal.
My businesses have gone deathly quiet since the middle of December ,but
by intenion ,my overhead is extremely low.Stliff profitable at 50% of turnover.
Wheteher this is the normal 'sticker shock' period we get every year renains to be seen.
All the classic signs of general bankruptcy are evident to any experienced businessman.
All downhill from here,I suspect.
You guys will call me a pussy for this. This girl has lungs! Some tunes have meaning! Take Me Away... A Secret Place - YouTube
Have you been drinking tonight? ;-)
Is that trick question Freddie? No/ Waiting for Draghi. Just shorted eur/gbp as The pound has been pounded.
ECB: European Central Bank home page It's amaazing how you little pukes get excited when I speak!
Freddie watch and learn. classic H/H patteern on the 4 hour eur/gbp chart . Already scalped it for 18 pips. Now if you watch the m5 chart form a shoulder on the 4 hour chart? Be careful, as the algos will be out with that ECB meeting later.
I have another trade for you later. That's called price action... Oh wait. You wouldn't know a candle if it was lit for your funeral!
You are clairvoyant, Yen: You're a pussy.
hey Fuck face? ya you. better hope we never meet in person./
Classic/ good luck, Pachino & De Niro.
the markets are near lock up, get your money outta the banks is the best advice anyone can give, can't see how our broken society can be saved, humpty dumpty had a great fall.
"The uncertainty surrounding the economy that currently exists limits the ability for businesses to plan"
As long as that excuse has been used, that rings hollow. Now it's just an excuse to make things worse.
small business owners are fubar. some of them knew something was wrong back in 2004. some of them realized they were going down big time in 2009. today more of them wake up to the reality that they are being flushed down the drain. that top graph there, the blue one, i bet you a shiny bullion that graph is going south, way way south. sorry if got a bit direct here, it's the jägermeister that's doin' the talking.