NFIB Small Business Optimism Fades; Outlook For Economy Plunges

Tyler Durden's picture


For a brief month of "we've been down so long, everything looks up", the NFIB Small Business survey suggested the 'recovery' was real and so serial extrapolators (throwing out the 'and small business is the engine of job growth' meme) jumped on it as 'proof' that stocks are cheap and bonds should be sold... then comes June data today (and it's a disaster). 6 of the NFIB's 10 indicators decreased, with about half of the decline in the overall index due to less confidence in future business conditions, the report said, with only 2 indicators improving. CapEx dropped, Sales expectations dropped, 'good time to expand' dropped, actual sales dropped with only hiring plans rising (which seems odd in the face of all the negativity in the rest of the survey) - we will see.


"It's not a great time to expand"


and the "outlook for business" tumbled


As Goldman reports,

KEY NUMBERS: NFIB small business optimism 95.0 in June vs. median forecast 97.0


MAIN POINTS:1. Small business optimism declined to 95.0 in June (vs. consensus 97.0), from 96.6 in May. By component, the largest decline occurred in expectations for the economy (-10pt to -10), while real sales expectations (-4pt to +11) and the net percent reporting that "now is a good time to expand" also declined (-3pt to +7). Plans to increase employment improved a bit (+2pt to +12), while plans for capital expenditures declined (-2pt to +22).

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Tue, 07/08/2014 - 09:34 | 4935021 Newsboy
Newsboy's picture

Maybe time to open a little marijuana shop in Seattle?

Tue, 07/08/2014 - 09:40 | 4935034 localsavage
localsavage's picture

I guess that the ten's of thousands of new minimum wage workers flooding the borders aren't as exciting a Zuckerberg makes them out to be....

Tue, 07/08/2014 - 09:46 | 4935059 stant
stant's picture

He just wants his yard mowed for 10 bucks

Tue, 07/08/2014 - 09:51 | 4935067 Headbanger
Headbanger's picture

Anybody else notice the DJIA has just fallen below the peaks seen last month?

So much for "horizontal support"

USDJPY is not looking too happy happy joy joy either:


I know!   We can all sing Obombo's favorite song to make it all better now:

Tue, 07/08/2014 - 11:00 | 4935307 BraveSirRobin
BraveSirRobin's picture

Sorry to rain on the gloom and doom fest, but the variance in the data presented is well within statistical expectation. I see nothing alarming in the data whatsoever. Please notice it sigs and zags. Trend lines are still up, and the drop is in no way significant. 

Tue, 07/08/2014 - 09:46 | 4935058 MeMongo
MeMongo's picture

Or a greenhouse. Then at least one could gain an education in horticulture that would come in handy if/when TSHTF

Tue, 07/08/2014 - 09:38 | 4935024 Dr. Engali
Dr. Engali's picture

It's that damn sunny weather. People are out playing instead of buying.... Lousy fucking nice sunny weather.

Tue, 07/08/2014 - 09:35 | 4935025 Seasmoke
Seasmoke's picture

Everyone needs to get a public job !!!

Tue, 07/08/2014 - 09:38 | 4935031 Suisse
Suisse's picture

Recovery Summer! NFIB polling is racist!

Tue, 07/08/2014 - 09:40 | 4935035 papaswamp
papaswamp's picture

Hey but part time positions were soaring! Rally on!

Tue, 07/08/2014 - 09:40 | 4935037 adr
adr's picture

Businesses start out the year optimistic that orders will come in, that there will be a recovery. Once June hits, the year is essentially over. Any new orders coming in will be for 2015. So what you have by the end of June is what you are going to make for the year. You just hope all the accounts on 120 day terms pay up, which has been a major problem.

Forecasting has gone out the window. You can't get anyone to give projections, and if they do they are overly cautious leading to low supply if there turns out to be any demand.

I have watched another four close partners close up shop this year. There just isn't enough real business. All that exists is publicly traded channel stuffing to support the stock market, real sales are worse than ever.

Tue, 07/08/2014 - 09:45 | 4935054 farragut
farragut's picture

What business are you in, if you don't mind my asking? And, what region?

Tue, 07/08/2014 - 09:55 | 4935096 Colonel Walter ...
Colonel Walter E Kurtz's picture

Exactly correct ADR. At beginning of each year, we bid/quote work at higher prices, hoping to see if the prices will stick so that the employees can get raises. Every year, by about this time we are beaten down and realize that the model of utilizing actual employees and paying all the required taxes is so 20th century.

It is about time to start joining everyone else and utilize the independent contractor model where all the real cheating occurs. Just issue the 1099 to the one "legal" person/entity and let them dole the cash out to the undocumented immigrant workers. Fed gubmint does not seem to abide by the laws, so why in the heck should we try to follow their rules and lose money year after year.   



Tue, 07/08/2014 - 10:08 | 4935143 Oldwood
Oldwood's picture

Rules were supposed to be about a level playing field but now they are about giving advantage. Working for a living is the suckers game. Stealing is where the real money is, and the better connected you are the more success you will achieve. Bricks, mortar and equipment used to be business overhead, now it is only kickbacks and bribes.

Business brokers tell me that for a business to own and use equipment represents a liability to the business value, so after years of building a business and investing in the best equipment I can afford, I find that it is actually a burden. No body but a fool will pursue manufacturing anything with this kind of mentality. Everyone wants to be the middleman, collecting a commission. Unfortunately, middlemen too become redundant eventually. When no one makes anything anymore, what will the middlemen sell? Their souls?

Tue, 07/08/2014 - 13:58 | 4936078 Wait What
Wait What's picture


I made the same comment to an acquaintance just yesterday.

everyone wants to be an intermediary because it's easy money. you don't have to actually make anything, just bring buyers and sellers together. it's too obvious that it's a flawed model, esp. considering how quickly information moves these days. middlemen are being automated out of existance, like every other easy job.

Tue, 07/08/2014 - 09:41 | 4935041 oklaboy
oklaboy's picture

But, But, But Obamster said everything is just fine?

Tue, 07/08/2014 - 09:42 | 4935045 MeMongo
MeMongo's picture

Maybe if we take a hanful of these words at random and just completely change their definitions, than all these polls and reports and such will take on a moar positive flair!

Tue, 07/08/2014 - 09:43 | 4935049 Stoploss
Stoploss's picture

Cloward-Piven in action baby.

Tue, 07/08/2014 - 09:43 | 4935050 youngman
youngman's picture

They are hiring part more full time with all those expenses...

Tue, 07/08/2014 - 09:44 | 4935052 dobermangang
dobermangang's picture

Every small business owner I've talked this year is extremely concerned/worried about what's going on with the economy.  They haven't seen it so bad.  Seems like all their customers are going Galt.  Earnings in the 2nd half of this year should be very interesting.


Tue, 07/08/2014 - 10:01 | 4935119 Postal
Postal's picture

Earnings?What are those?

Tue, 07/08/2014 - 10:03 | 4935124 BeerMe
BeerMe's picture

I've heard some of the same.  Worst quarter in 30 years and what not.  For me things have picked up in June and the beginning of July but it isn't as great as it looks.  A lot of business coming from a few.  We're in a pretty good position but we've also been pretty cautious since November.

Tue, 07/08/2014 - 10:18 | 4935172 Oldwood
Oldwood's picture

Unfortunately I think a lot of this mini cycle we small businesses see is caused by our competition under pricing us and then failing. We lose projects to these desperate low bids and then we see business uptick when the competition falls. This is natural to some extent except its not supposed to go on indefinitely. The shrinking economy is slowly eating us all, but in bites, not uniform dissolution. Those with savings or equity will last longer than those without, and good business sense is always a plus, but if this does not change, it will all fail. I see businesses in my industry closing regularly simply giving up before they go bust. This is not political. Businesses work for the money and typically don't give up until they can't see any down the road. These are not stupid or lazy people. They are worth watching for early signs, especially for those who are currently blind and can't see what the fuck has been going on. They are the canary in the coal mine.

Tue, 07/08/2014 - 11:17 | 4935334 dobermangang
dobermangang's picture

Another problem is customers can't get loans from banks to make purchases.  I got several truck loads of free dirt from a guy that excavates and hauls away dirt for a swimming pool contractor. He told me his business is DEAD.  Just awful.  He said a few people want swimming pools built, but they simply can't get loans.  I got the same story from a guy that builds pole barns several years ago.  People want pole barns built, but can't get loans to have it done.  Cash is king.

Tue, 07/08/2014 - 12:46 | 4935757 BeerMe
BeerMe's picture

Which is interesting.  I've heard from sales people how they've had so many shops close this year etc.  It is also interesting that we are starting to get some newer customers for whatever reason.

Right now I'm cautious and working on paying off unnecessary debt and looking for small improvement/growth opportunities wherever.

Tue, 07/08/2014 - 09:45 | 4935057 TabakLover
TabakLover's picture

Was July 3rd NFP the top?   Old adage.....bull markets end on good news, not bad.  We'll see.

Tue, 07/08/2014 - 09:48 | 4935065 papaswamp
papaswamp's picture

BTFD Bitchez!!!!

Tue, 07/08/2014 - 09:50 | 4935071 buzzsaw99
buzzsaw99's picture

small businesses aren't generally listed so they don't count [/sarcasm]

Tue, 07/08/2014 - 10:19 | 4935181 orangegeek
orangegeek's picture

Hey NFIB, Barry called.  Change your story or you get a visit from the IRS and the Black Panthers

Tue, 07/08/2014 - 10:45 | 4935263 homiegot
homiegot's picture


Tue, 07/08/2014 - 11:19 | 4935386 dobermangang
Tue, 07/08/2014 - 18:54 | 4937363 AdvancingTime
AdvancingTime's picture

I deal with small business on a day to day basis and I will tell you they have little reason to be optimistic. Small business, with two to ten employees, are becoming an  endangered species in America. The family business once the backbone of this country is under attack from the unintended consequences of the many laws and mandates passed in recent years.

Inspections, a plethora of permits, licenses, taxes, insurance requirements, and regulations make it almost impossible for a small business to open, compete, and operate legally. Big government has become toxic for small business. More on this subject in the article below.


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