Four out of five small businesses plan to freeze or reduce their workforces over the next six months because of weak sales projections and see little value in tax incentives to help them create jobs, according to a new economic outlook survey conducted by PNC Financial Services Group
According to the survey of 1,462 small- to mid-sized company owners conducted during August and September, only 14 percent said proposed tax incentives would make a difference in their hiring plans. The survey also found that fears of lower sales and therefore much lower profit margins have worsened since the last PNC telephone poll was taken six months ago, indicating a “renewed pessimism” about the economy in general.
“As business confidence plunges to a near-record low, the concern is we will scare ourselves into a double-dip recession, thus turning it into a self-fulfilling prophecy,” said PNC chief economist Stuart Hoffman. “These findings support our forecast that the economic recovery will persist, but the slow pace of growth will be insufficient to make any progress in lowering the nation’s painfully high unemployment rate in the coming year.”
The survey also found that 56 percent of American small business owners expect the deficit reduction deal between President Barack Obama and Congress to have a negative impact on the economy overall. Seventy-two percent said they also expect the recent Standard & Poor’s downgrade of the U.S. credit rating to have an overall negative effect, while 42 percent expressed concern that it would have a direct adverse impact on their own companies.
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