Wednesday, June 13, 2012

Link of the Day - Small Business Optimism Index Stagnates

So, today's link of the day is actually three links from Calculated Risk's blog.  The first is the headline for this post, the May 2012 index of Small Business Optimism stagnated, dropping a fraction in month to month scoring while up slightly in year to year figures.  Calculated Risk notices one positive - poor sales are no longer the #1 concern of small business owners, they are back to complaining about taxes.

As an aside, the NFIB surveys small business owners every month and has done so for several decades.  Among the questions is one that inquires what is their number one concern.  For nearly the entirety of the survey, taxes has been the number one listed concern.

Before that becomes a political hot tomato, taxes are historically the #1 issue regardless of whether a Democrat or Republican is in the White House, regardless of which party controls congress, and regardless of the real level of taxation in the economy (in other words, Americans like to complain about taxes).  That changed in the Great Recession (2008-2009).  For the first time, essentially ever, small business owners stopped listing taxes as their #1 and started saying lack of sales was their #1 concern.  So, the fact that May 2012 marks the return of 'complaining about taxes,' is actually a good thing.  It means sales aren't as bad as they have been.

Calculated Risk also notes that small businesses are heavily weighted in retail and real estate market segments.  So, it's interesting to see what's up in those areas - since it disproportionally effects small business.  The good news is that retail is improving.  While retail was down .2% from April to May, it's up 5.3% from May11 to May12.  Similarly, housing prices are rising again and housing inventory (the number of houses listed for sale) are decreasing.  Both of which are good signs for the overall economy and very good signs for small business.

We aren't out of the woods, the southern European economies remain in shambles and the damage is spilling over to European banks.  While U.S. banks should be reasonably shielded from the risk, the returning recession to Europe will not be good for global demand.

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