Black Swan Insights

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

ASA Staffing Index Improving

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Contrary to what you hear from the large multinationals, the real economy in the US (e.g. small businesses) never recovered and is trapped in a never ending recession/depression. The National Federation of Independent Business announced the results of their July survey. The results were not positive:

The Index of Small Business Optimism lost 0.9 points in July and reached 88.1 following a sharp decline in June. The Index has been below 93 every month since January 2008 (31 months), and below 90 for 24 of those months, all readings typical of a weak or recession-mired economy. Ninety percent of the decline this month resulted from deterioration in the outlook for business conditions in the next six months.

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Words of Wisdom from Leonardo da Vinci

1. I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do.

2.Simplicity is the ultimate sophistication.

3.Life well spent is long.

4.Life is pretty simple: You do some stuff. Most fails. Some works. You do more of what works. If it works big, others quickly copy it. Then you do something else. The trick is the doing something else.

5. Marriage is like putting your hand into a bag of snakes in the hope of pulling out an eel.

Black Swan Insights

Small Businesses Are Still Suffering

Small Business Optimism Declines--Great Recession Continues For The Real Economy