Small Businesses Are Still Suffering

    It is tough to be a small business in America. The National Federation of Independent Businesses released its monthly optimism index which showed a small increase of 0.7 to 88.8. While the index improved slightly, the NFIB is quick to point out that a reading below 90 is consistent with a recession. The index has been below 90 for 25 of the past 32 months, indicating that small businesses have never recovered from the great recession. The main complaint from most small businesses is weak demand and price deflation for goods and services. Another factor is poor policy decisions out of Washington, like increasing taxes and the adoption of the ruinous health care plan. As a result capital spending is almost non-existent as small businesses prepare for an uncertain future. And forget about small businesses hiring any more workers. Not a good sign considering small businesses create the majority of new jobs in the US. Here are a few key excerpts from the report:

Labor markets

There is no life in the jobs market. The Bureau of Labor Statistics (BLS) reported 67,000 new private sector jobs in August, but 45,000 were from education and health care which are heavily dependent on government spending, not exactly "Main Street"companies.
Profit and Wages
Reports of positive profit trends improved three points in August, registering a net negative 30 percentage points, 26 points worse than the best expansion reading reached in 2005. The persistence of this imbalance is bad news for the small business community.
Capital Spending

The frequency of reported capital outlays over the past six months fell one point to 44 percent of all firms, again hitting the 35 year record low. The environment for capital spending is not good. Interest rates are low but the record long recession has eroded financial strength.

Owners do not trust the economic policies in place or proposed, fear the economic implications of massive deficits and are distressed by global and national developments that make the future more uncertain.

Black Swan Insights

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