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Small Business Confidence Plummeting
Posted on April 20, 2012 at 11:45 AM EDT
Small businesses are a critical part of the job creation that occurs in the U.S. Small firms accounted for 48.5% of the job creation in 2011, and 51.6% of the job creation year-to-date (source: ADP). Since many are saying that an economic recovery is taking hold in the U.S. (which means job creation is only going to improve in 2012), I thought I’d revisit the small business index to see if this economic strength and job creation were being reflected there. The National Federation of Independent Business released its latest index readings—for March—that fell to the lowest level since November of 2011! Furthermore, its Expectations Index, which measures small business confidence in the next six months, dropped two points below February’s reading, further questioning how job creation will occur in this country. Not only are these readings not exhibiting any strength, but also these 25-year historically low readings are more commonly found during recessions! As with last month’s survey, which I wrote about in these pages, the number one concern among small business owners going forward continues to be poor sales visibility. Small business’ number two concern is inflation; the biggest jump in inflation concern since 2008! Small businesses are concerned about commodity prices. As large businesses are saying that margins are being squeezed by commodity prices and Profit Confidential ’s readership says inflation is a problem, we should all stop complaining, because the Federal Reserve says such inflation pressures are transitory… Is this the backdrop for a strong jobs market and job creation? More and more of small businesses have said they were going to stop lowering prices, while many more have raised prices and will continue to raise prices because of the rising inflation they are experiencing. These higher prices mean that the consumer will be paying more for goods and services in this weak economy! The number of small business owners making capital expenditures fell in March, reversing the small gains made in January and February. The capital expenditures level fell to the lowest level since 2010. If small businesses are not confident enough to invest—capital expenditures—then how can job creation occur in this country? In the last four months, the number of small businesses that said they were going to create new jobs has continued to fall. How is the jobs market going to improve with these kinds of statistics and where is the job creation going to come from? (Also see: Pathetic Job Numbers Expose Fake Economic Recovery .) The above is a blatant warning to those who believe what the mainstream media is telling us about the supposed economic recovery in the U.S. Small businesses are disagreeing with what we …
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