While larger businesses are starting to show optimism and some of them have resumed hiring, small businesses remain pessimistic. The National Federation of Independent Business released its small business optimism index for the month of February, and it showed a drop of 1.3 points to 88.0.
Seeking to place blame, the chief economist for the NFIB blamed the "Washington DC agenda" for the negative sentiment among small businesses. First, someone's got to define what that agenda is. Second, what is it about, say, restricting large banks from prop trading that will affect small businesses? If they were affected by the rule, then they wouldn't be a small business, would they?
It is disappointing to see what should be an economic data release tainted by political rants from the organization releasing the data. Regulation is something that the NFIB rails against even though most regulations exempt its members, and the organization is seizing on this negative survey to push its agenda. Nevertheless, there is useful information in the report.
While optimism has dipped among small businesses, they look like they plan to resume hiring. Employment per firm dropped by 0.13 workers, which is way down from the 0.5 workers per firm average since the recession began. Looking forward, 13 percent of small businesses plan to increase their payrolls, while eight percent plan to cut payrolls. The number of businesses planning to hire more workers increased by three points, while the number of businesses looking to cut them decreased by two percent. Thus, even in the negative survey, there's some good news.
Despite the ranting against the "Washington DC agenda" from the NFIB, the real reason for pessimism among small businesses is decreasing sales. Companies reporting higher sales dropped by two points to 15 percent, while companies reporting lower sales was unchanged at 46 percent. That is the real reason for pessimism among small businesses. It is hard to be optimistic when you see sales falling.
One of of the main pillars of conventional wisdom is that small businesses drive economy. That thinking needs to be examined thoroughly. It is clear that larger employers are the ones who are resuming hiring at a far faster rate than small businesses. Maybe it's the large employers that drive hiring, and small businesses just follow along.
Small businesses and family farms are, in the opinion of this writer, often given a spot on a pedastal that they simply don't deserve. And this comes from an individual who is the sole proprietor of a small business. Who, incidentally, will never join the NFIB because they're so full of crap.
This is something to ponder on a day where there's little economic data to drive the markets.
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Seeking to place blame, the chief economist for the NFIB blamed the "Washington DC agenda" for the negative sentiment among small businesses. First, someone's got to define what that agenda is. Second, what is it about, say, restricting large banks from prop trading that will affect small businesses? If they were affected by the rule, then they wouldn't be a small business, would they?
It is disappointing to see what should be an economic data release tainted by political rants from the organization releasing the data. Regulation is something that the NFIB rails against even though most regulations exempt its members, and the organization is seizing on this negative survey to push its agenda. Nevertheless, there is useful information in the report.
While optimism has dipped among small businesses, they look like they plan to resume hiring. Employment per firm dropped by 0.13 workers, which is way down from the 0.5 workers per firm average since the recession began. Looking forward, 13 percent of small businesses plan to increase their payrolls, while eight percent plan to cut payrolls. The number of businesses planning to hire more workers increased by three points, while the number of businesses looking to cut them decreased by two percent. Thus, even in the negative survey, there's some good news.
Despite the ranting against the "Washington DC agenda" from the NFIB, the real reason for pessimism among small businesses is decreasing sales. Companies reporting higher sales dropped by two points to 15 percent, while companies reporting lower sales was unchanged at 46 percent. That is the real reason for pessimism among small businesses. It is hard to be optimistic when you see sales falling.
One of of the main pillars of conventional wisdom is that small businesses drive economy. That thinking needs to be examined thoroughly. It is clear that larger employers are the ones who are resuming hiring at a far faster rate than small businesses. Maybe it's the large employers that drive hiring, and small businesses just follow along.
Small businesses and family farms are, in the opinion of this writer, often given a spot on a pedastal that they simply don't deserve. And this comes from an individual who is the sole proprietor of a small business. Who, incidentally, will never join the NFIB because they're so full of crap.
This is something to ponder on a day where there's little economic data to drive the markets.
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