Tags: small business | NFIB | recovery | economy

NFIB: America's Small Businesses Still See Lukewarm Recovery

By    |   Thursday, 16 January 2014 07:32 AM

Small business optimism increased last year, but sentiment is still far beneath levels that typify a real recovery, and government regulation is a source of blame, a new survey of U.S. small businesses by the National Federation of Independent Businesses (NFIB) shows.

The NFIB said its December survey showed a narrow increase in employment and a gain in capital spending at the nation's small companies. The owner optimism index rose to 93.9, up slightly over the previous month, but "nowhere close" to readings over 100 that indicate healthy recover periods.

"Economists are raising their forecasts for 2014, but this appears to be based
more on 'hope' than on any real 'change' in the fundamentals," NFIB Chief Economist
William Dunkelberg and Senior Policy Analyst Holly Wade wrote in the report.

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"Consumers are a bit more optimistic as are small business owners, but in
the context of history, these measures are still weak."

The survey found NFIB owners increased employment by an average of 0.24 workers in December, the best gain since 2006.

About 38 percent reported few or no qualified applicants showed up for open position. "This is not just a 'skills' issue, but one of poor attitudes, work habits, timeliness, appearance and expectations, especially among the applicants for lower-skill jobs," the survey noted.

The percentage of small business owners reporting higher nominal sales in the three months ending in December compared with the prior three months was unchanged at -8 percent. Earnings and wage trends and inflation trends also remained in negative territory in December.

The NFIB said President Obama's solution for economic malaise is to give another $26 billion to the long-term unemployed despite the government's huge debts.

"If you borrow $26 billion from China and give it to consumers, it probably does have a positive impact, but does nothing to fix the economy or encourage labor force participation or improve the labor force. Servicing this debt will soon put a real crimp in the government budget."

In addition, 23 percent of the NFIB's small business owners said government taxes were their single biggest problem, 20 percent put government regulations and red tape at the top of their problem list, and 31 percent said the political environment in Washington, D.C. was stopping them from spending on expansion.

Economist Ed Yardeni, president of Yardeni Research, derived a more optimistic view from the monthly survey. Yardeni said he took the NFIB reports from the previous 12 months and averaged them to "smooth out" volatility.

As a result, Yardeni said hiring expectations among the nation's small businesses are at their highest levels since October 2008, and capital spending intent is at its highest level since November 2008.

Yardeni said separate economic reports showing higher retail sales in the fourth quarter but weak December jobs figures contribute to his conclusion that the Federal Reserve should hold off further tapering of its massive fiscal stimulus until March.

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Economy
Small business optimism increased last year, but sentiment is still far beneath levels that typify a real recovery, and government regulation is a source of blame, a new survey of U.S. small businesses by the National Federation of Independent Businesses (NFIB) shows.
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2014-32-16
Thursday, 16 January 2014 07:32 AM
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