Small businesses continue to feel highly pessimistic about the U.S. economic outlook, according to a report Tuesday that showed a monthly indicator of their sentiment turning weaker in June.
The National Federation of Independent Businesses said its Small Business Optimism Index dropped 3.2 points to 89.0 last month, more than erasing the modest 1.6-point gain it saw in May. The report, which was compiled by NFIB Chief Economist William Dunkelberg, described the decline as “a very disappointing outcome.”
In past periods following a recession, the NFIB index typically has risen back above 100 within a quarter or two of the trough in economic activity as measured by the National Bureau of Economic Research. That hasn’t been the case during this recovery. The index hasn’t broken above 93 in any month since January 2008 when the economy was in the early stages of recession, even though the NBER is expected to eventually date the beginning of the recovery in the third quarter of last year.
1933 and waiting for the big one.
Don
Washington is replete with demonstrably incompetent militant idealogues who (amongst way too many other things) have repeatedly attacked the Chamber of Commerce. They have passed tax laws that will remove approximately 20% of the discretionary income of our best customers — who typically provide 80% of the profit for most small businesses — and which, if we happen to have a good year will tax away [i]our[/i] good fortune, making impossible for us to move ahead, reduce our debt, or invest in our businesses.
They have declared 3.3% net to be “unconscionable profits” (insurance industry) and have declared that business “unfairly” extract their wealth from the poor.
And somebody wonders why we’re pessimistic?
#2 Wait ’til January 1st when yours, and everyone else’s, income taxes go up. It will be the larrgest tax increase in American history. It will take additional money out of your pocket and your coustomers will have less to spend. Hey America–how’s that hope and change thingy working for you?
“Hiring remained weak. Only 9% of owners reported unfilled job openings, in line with May’s reading. Another 8% said they plan to cut jobs, up from 7% in May, while only 10% said they planned to create new jobs, a decline from 14% in the previous month.
The subindex on earnings trends deteriorated, declining by four points to negative 28%. Without seasonal adjustments, the percentage reporting higher profits in June came in at 16%, up from 15% in May, while 47% said that profits are falling, compared with 49% in May.”
What we have here is a failure to communicate. Business (which has actual, real life experience in business) knows without a doubt business is in business to make money. The Obama groupies (OGs) running the menagerie formerly known as the United States of America (and who have no actual real life experience in business) believe business is in business to hire people and create more jobs.
Too many business people supported the OGs in the last election in the mistaken belief that if they just ‘had a seat at the table’ they might be able to ride out the problems by getting the OGs to toss them just enough tidbits to keep things afloat until the grownups came home to set things right. Didn’t quite work out that way.
The OGs are appalled that business would find earnings to be so important, even at a time like this when people are out of work and in need of jobs so they can pay taxes for the OGs to redistribute for the betterment (as they deem it to be so) of society.
Business just wants to cling to the outdated notion that without earnings there can be no jobs. The OGs expect business to ‘take one for the team’ and keep hiring so long as there is a shekel to be found under business’s mattress. Never mind once the shekels are gone business finds itself in Chapter 11 condition resulting from (as Hillary Clinton so touchingly put it during the campaign as she showed great compassion for small businesses) ‘being undercapitalized’ (presumable deriving from having a poor business plan).
In the real world, jobs are created when real, healthy earnings are realized as a result of good business practice AND GOOD GOVERNMENT PRACTICE. Good government practice is founded in fiscal responsibility (limiting spending to no more than the revenue the treasury brings in), establishing sound monetary policy that creates a strong dollar to attract international business and a sensible regulatory environment that works with business to the betterment of the nation’s economic health. Right now government practice is in firm opposition to all the things necessary for true job creation.
Elections, indeed, have consequences.
I run a small business – why grow?
we are living in a world with some new magic numbers
Here are two of them
Make less than $250,000 per year (though this seems to be dropping to $200,000 recently. Note that this is not take home less than this but includes both what my family needs to live on and what the bank would want to see retained in the business ie to lend me money – which I need to cover payroll and materials while I am waiting for clients to pay us). This also includes any money my wife makes from working.
Have less than 50 employees (pre recession we had a little over 80 – not again)
Congress’ efforts to radically increase taxes on the commercial real estate industry with a 133% increase on the taxes they have to pay on profits, has pretty much caused the real estate industry to grind to a halt on going forward with any new projects. Like the rest of the country, everyone is now waiting to see if Congress will be thrown out of office in November, but no one is going to engage in any sort of real economic expansion given the punitive anti-business people presently running the country.
It seems obvious the this administration is determined to crush small business and entrepreneurs. Has anybody read about the recent IRS requirements for businesses of all sizes to produce 1099s for any vendor paid over $600 annually. Can you even imagine the staggering ramifications of this policy?
I thought the stimulus would spark a whole bunch of inflation?
It makes sense. Nobody’s buying what the small businesses want. They’re unemployed, after all, and not even getting an unemployment check.
I don’t think Dilbertnomore quite understands the Keynesian position. It’s not merely about redistributing wealth – the whole purpose of deficit spending is so that taxes are not raised while spending is encouraged. Because businesses aren’t hiring, demand needs to be increased so that businesses want to hire for their own self-interest.
However, given the political realities, Obama does feel pressured to pay for costs as they arise, such as the war.
Raising taxes on the especially wealthy is good for the economy – it develops the middle class. The evidence can be seen in the fact that, while tax rates were highest from 1940-1972, the economy was booming. And during that time, no busts in the cycle.
#8, well the topic had to do with small business not stepping up to the plate and hire despite a lack of revenue to pay the freight and now we have the red herring of Keynes tossed into the mix. Keynes really doesn’t apply here or nearly anywhere else lately.
Keynes stated that in good economic times the private sector naturally spends lots of $$ to keep the economy humming along so the public sector (gummint) doesn’t have to and, in fact, shouldn’t. Conversely, during tough economic times when the private sector clamps down on spending, gummint needs to step up to the plate and toss around baskets full of the long green to stimulate the private sector into getting with the program and add to the kitty to get things back on an even keel. OK so far? Then…
Keynes not applicable now? How’s that?
Well, whether Brother Keynes is serenely looking down on us or craning his overly warm neck to look up, I’d bet you a nickel his corporeal remains are doing wing-overs in his grave over the misapplicaton of his signature work. Back in the day, Brother Keynes made it clear that gummint needed to adjust its spending habits to the tune of the economy. Economy doing a happy tune – clamp down on gummint spending. Economy doing a dirge – crank up the gummint printing presses. That was largely because in those heady days when gummint actually nearly did what Keynes suggested there were much smaller gummint budgets (as a percentage of much smaller GNP) and a more constrained GNP (in those days – GDP now)) so a gummint infusion of lots of $$ made a much bigger relative splash that was less scary to the economy than today. Just as in days of yore when George Washington was able to fling a dollar across the Deleware River with legendary ease, an Olympian discus thrower couldn’t make the distance today because – (wait for it) – a dollar just doesn’t go as far as it used to. (Rimshot!) The real misapplication of Keynes is amplified by both major political party’s truly ugly addiction to spend to the extreme limits of their very fertile imaginations and beyond. The only good thing I can say about the GOP in this instance is at least they don’t trot out the Keynes canard to justify their porkfests, they just do it and wallow in the trough honestly.
Sadly for the Dems, this time around the Keynesian angle was a tiny toot even powered by a huge nearly Trillion-dollar cash dump. The advertised stimulus/’jobs’ legislation was so laden with pork the price per ‘job’ was at least $250K per. And since the ‘jobs’ created were really more like short term projects – certainly not career jobs – the bang for the buck was really puny but at a monstrously high cost. Also, about 90% of the ‘job’ created or ‘saved’ (Ha!) were gummint jobs which don’t contribute to economic growth, just suck on the public teat.
And please don’t bring up the ‘multiplier’ in which a buck spent by the gummint generates a buck and a half of economic activity. The ‘multiplier’ is about as efficacious as filling a bucket with water from the deep and of the swimming pool then walking it to the other end and dumping back into the selfsame pool and looking in vane for a rise in the water level.
So long as the gummint model for economic stability calls for spending lots more than they have revenue from the Treasury to cover during the good times and to diligently spend even more in the name of the grand prophet Keynes in the bad times, we, well and truly, are trekking off to a socialist hell in a handbasket.
#8–One small problem with your argument. JFK ran through the largest tax cut in US history. That is what spurred the ecomomy from 1961 to 1972. And our Arab freinds killed it in 1972 with the oil embargo. The only thing that revived the stagnant economy was the Reagan tax cuts. You also need to check your history about the 1950’s. I don’t have the data right at my fingertips, but I know we had one recession during the Eisenhower Adminsitration, and I think we had two. The only thing that kept the US out of major economic troubles was we had the only factories that hadn’t been bombed during WWII. And what caused the economy to totally tank from 1977 to 1981–the ecomomic policies of the second worst modern president-Jimmy Carter. He wanted to stimulate the ecomomy and raise taxes (gosh that sounds familiar). I will agree with one thing–the Democrats have never actually tried pure Keyensian economics, because you are supposed to raise taxes in a recession. And thanks for declaring those who make over $200K “especially wealthy.”
OOPS–You are NOT supposed to raise taxes during a recession!!!!
#8, using your logic, we should adopt Obama’s father’s Kenyan-muslim tax policy: the state taxes at 100% and then gives back to the people according to their needs.
If high marginal rates were so good (and only you believe that) then we should be in Utopia at 100%.
#8, one more thing you fail to point out. While the upper tax rates may have been higher between 40 and 72 (not sure that is correct but assume it is so) than now, the lower tax rates fell on anyone who earned any money. That is, everyone paid taxes, not just the upper 50% of wage earners, like now. And over 40% of taxes were not paid by less than 5% of those with income like now. One more thing you “conveniently” left out, among many – sales and property taxes and state income taxes (if they existed – and many states didn’t have them) were much lower between 40 and 72. Finally, your statement that taxing the “wealthy” stimulates the middle class is an old canard as well. May have been true in long times past – is no longer. With this gov’t, the taxes from the wealty are simply transferred to this permanent underclass that never works, generation after generation (which was created by the Democratic Party’s “Great Society” legislation in the 60s – thank you LBJ and that 40 years of Democratic Party rule in Congress). That underclass contributes nothing or very little to the economy or to the income of the gov’t and is only a drag on both. It has now grown to the point that it can no longer be afforded here in the US and is causing bankruptcy in Europe. But JW, you are correct that the folks in DC are still following your theories as zealous idealogues.
John, I wonder what qualifies as middle-income and wealthy these days. A million doesn’t go as far as it did back when I was a boy. Back then millionaires were rare … today every Thomas, Richard, & Harrold has become one.
Dilbert – I’m intrigued by the idea that the multiplier effect doesn’t work. And after repeating the Keynsian position, you don’t offer much real evidence that it doesn’t work.
And as far as “socialist hell” do you mean, say Sweden or Albania? France or Russia? Socialist the way Canada or England is socialist? I’m sure there are plenty of Canadians who think that they live in a hellacious country and would be completely willing to read up on the oppressiveness of their country.
#15, I see you’ve resurfaced with meager little except to re-raise the red herring of Keynes (Peace be upon him!), the nearest thing to deity held by Progressive economic poseurs. I’ll leave it at this. We have been seriously awash in the Keynesian solution since shortly before the Obama regime arrived in town. What have we to show for the trillions flushed down the drain by the White House, Congress and the FED? A 9.5% unemployment rate (which is actually much closer to 20% when the discouraged and no longer looking are counted), a national debt of $13,197,789,952,341 (and counting) as of a few minutes ago and Obama/Biden’s extremely laughable claim the regime has created or saved (Ha! Ha) over 3,000,000 ‘jobs’. (Of course, we continue to wait for the breakout of those 3,000,000+ ‘jobs’. How many of the 3,000,000 are new permanent career positions in the private sector? I bet the answer is damn few net, if any. The vast, vast majority are pure smoke and mirrors.) Now we are told, even by the state-run media, that the stimulus is running out of steam and relief will not be seen for years to come. That is my evidence your much beloved deity Keynes is a big fat failure. Just like socialism, there just isn’t enough ‘other people’s money’ to feed a Keynesian solution.
And please don’t give that tired old chestnut that Obama inherited it all from Bush. The last Bush deficit was $161 billion. Obama’s deficit is $1,433,516,874,387 (and rising) as of a few minutes ago. That’s a very, very big bunch of bucks with no visible bang.
As to ‘socialist hell,’ I’d say that if it isn’t pretty darn close to an originalist understanding of the U.S. Constitution (with the 16th and 17th Amendments junked and the utter nonsense excised from the beginning of the 14th Amendment that has been interpreted to confer citizenship upon the offspring of any person who gives birth within the United States, no matter their status along with a vastly more limited reading of the truly ridiculous interpretation of the ‘Commerce Clause’ stemming from the 1942 Supreme Court decision that Congress now uses as the vehicle to pass as law of the land any bizzarre thing Progressives can buy a sufficient majority to pass) we’re pretty well on the way to the land of your dreams. As to your specific national examples, I’m sure I could find aspects of almost all that might be OK, but there certainly are many aspects of each that snuggle them right up against the ‘socialist hell’ label.
Ready for your next red herring. You seem to have little else to offer. You’ll have to do better in the future or I’m going to start ignoring you.
I’m not sure if I’d be disputing that there’s a pretty big deficit. I think the [url=http://www.cato-at-liberty.org/2009/11/19/dont-blame-obama-for-bushs-2009-deficit/]Cato Institute got it right[/url] about who was responsible. I’m skeptical, based on past practice, that the Republicans are that interested in the deficit. As Kyl recently implied, cutting taxes for the wealthy takes priority.
I am disputing whether the deficit matters in the short term, or to whom. The two arguments I’ve read about it mattering have to do with the selling of bonds and the possibility of inflation. But bond traders are still buying American bonds; there’s no evidence of inflation anywhere. Again, the comparison is between Brazil and Ireland. Which would we like to imitate?
If we’re going to have an economy where there are more jobs and fewer unemployed, there will have to be more spending. And that’s the point: we need more spending, and I don’t care who does it. Businesses aren’t.
Eventually, we’ll have to deal with the deficit. Not now. Get people spending first, and then there will be more private businesses, and more spending and more businesses. It does seem that Wall street has begun to hire again.
I admit, we probably have different understandings of the US constitution (I don’t think the founders themselves would have had “originalist” understandings. And anyone who thinks that it didn’t need some modification might want to reread the stuff about slaves [url=http://news.harvard.edu/gazette/story/2010/05/text-of-justice-david-souters-speech/]Souter, in my view, has a much more compelling understanding[/url]. And what’s all this about the 17th amendment? Do you WANT more Democrats in the senate?) But, in principle, a democratic citizenry can make decisions about what happens in the public. It may choose for broader health care, unemployment relief, and regulation because… its a democracy, and not a corporation. It protects private property (and since the wealthy have more, the state must spend more time protecting the prosperous) and does what individuals might not choose to do.
A couple things about language. I find that most conservatives have very fuzzy definitions of “socialism” such that the gulag and the British NHS is the same thing. at that point language doesn’t seem to be very helpful and it looks a lot more like name calling. More accurate, and less inflammatory, words might be “planned economy,” “Mixed economy” and “commercial economy.” “commercial economy” I believe is what Adam Smith, in fact, used. I think “capitalism” is what Marx used.
We may have very different views about the state. I admit, I’m not a utopian. Politics has always – even in the beginning- been messy. Nor am I particularly impressed by any view that makes Americans more interesting, sophisticate, smarter, or exceptional than other nations (although we do seem to be particularly enthralled by the wealthy).
But I’m not sure what you think a “land of my dreams” looks like, but personally I’m not satisfied that given this is a land of plenty we have as much poverty and misery as we do. I think its criminal that, as a country, we’re satisfied with the amount of suffering that many Americans have. I think its awful that smart middle class kids have to go into hundreds of thousands of dollars in debt in order to get an education. I think it’s mean to have a country where poor US pregnant women can’t get effective health care, and have to choose between caring for their child or working. It does sometimes seem to me that when we talk about “liberty” we’re talking about liberty for those who can afford it – or liberty mainly to consume. I find it unconscionable that we have laws that enable little monarchies to form, laws that allow the privileged to live recklessly while the rest of us obey the laws. From my vantage point, I am uncomfortable with plutocracy and believe in fairness.
Now do I have issues with other countries? Not sure. My English and Dutch cousins seem fairly happy (the English a little less so), and an ex-girlfriend is working for a French multinational company. She’s a capitalist, but never returning (she has a very high quality of life). If Obama was striving for that sort of mixed economy, I don’t think I’d mind. But he’s doing a really horrible job of it if thats what he wants.
If he were, he would have actually pushed for single payer; gotten tough with the banks; and launched a public works program instead of the half-hearted stimulus. Instead, compromises with businesses the entire way. Perhaps they aren’t robbing the country anymore.
I admit I find the “many aspects of each” a little too vague to be helpful to me. I tend, perhaps, to make too many distinctions. I think that Cuba is a lot different than Denmark. And for all the worries about Obama’s tyranny, I’ve not seen any troops in my neck of the woods breaking down houses, and my IRS bill is quite modest (in fact lower this year than previously!). My point, “socialist hell” is hyperbole and designed to create anxiety rather than to foster understanding.
There are good reasons to critique Obama. That he’s a socialist is not one of them. [url=http://www.frumforum.com/conor-vs-levin-the-next-round]At least one conservative agrees.[/url]
“Get people spending first, and then there will be more private businesses, and more spending and more businesses.”
More Keynesian crap. Business is sitting on nearly $2 trillion and people are not spending because neither has any confidence our current government has a clue about allowing the economy to succeed. Stimulus will not open those purse strings. A plan people and business believe can work will. Of course, the iron fist of government could by a trumped up Executive Order direct the ‘proper’ employment of those private resources ‘for the good of the state.’ Might be necessary because, sadly, Obama and his sycophants’ Marxist ideology won’t allow for implementation of an effective Capitalist solution.
“stuff about slaves”
The naivety of faulting the Founders for wisely enacting the 3/5 Compromise just astounds me. The 3/5 Compromise limited the power of the slave states considerably by reducing their counted population which resulted in fewer of their Representatives in Congress. As a result the slave states enjoyed much less power in the House than they would had slaves been counted fully as the population of those states. And had slaves been counted fully, adding to the Representatives of those states, would their interests have been better looked after? I think not. Another of your silly red herrings.
“And what’s all this about the 17th amendment? Do you WANT more Democrats in the senate?”
What I want in the Senate is a body of legislator motivated differently from those in the House. The Founders gave us a balance of legislative power with a powerful role for the states to counter the short term desires of the people. Thanks to Wilsonian Progressiveism that has been lost for nearly a hundred years. We are not better for it.
“land of my dreams”
More redistributionist crap spread over too many very empty heart-tugging words. The founders gave us the opportunity for each to access success through his own efforts with minimal intrusion into our lives. The right to choose each’s path to success must also allow for the potential to fail. And many successful at one time later failed. It is not the role of government to pick winners and losers, except in totalitarian systems. Streets are named after Progressives who insist on freedom and liberty for their very own elite selves but are adamant that intrusive, busybody control is necessary for everyone else. The name of all the streets is ‘One Way.’
We do have very different views. The difference is I’ll be willing to let the constitutional amendment process direct the changes needed to refine our nation. Progressives know an honest debate won’t bring the hail of destruction they want. They depend on jamming through their crap on the nation by whatever back door they can find. If you dispute this, lets just see how gracefully Progressives accept the will of the people this November when they are shown the door and told to depart from control and power in peace. Watch for a Lame Duck session of Congress to make one last attempt to jam their crap down our throats. That will be the most obvious evidence of the totalitarianism of the Progressives.
I’ve wasted enough of my time on you.
#18 I do hope you haven’t taken this personally. I’m sure you’re a nice guy. I’m fully willing to reconsider my views on some things, but an assertion that something is “keynesian crap” and then actually making Keynes’ point about confidence doesn’t assure me that you’ve actually read Keynes. I gave you several arguments about the current economic condition and you didn’t refute a single one.
Here’s another view. People are not spending because they don’t have confidence they’ll keep their jobs or they are unemployed. Businesses are not confident because nobody is demanding their services. Because people are unemployed.
You miss one element of Keynsianism: Speed. Eventually businesses, without government help, will spend more. But it is painful and slow. In that time, a generation becomes reduced to poverty. People become embittered and susceptible to communist ideologies (remember that during the 1930’s people – many people – thought that capitalism had failed. Keynes disagreed, and thought it could be saved by a technical fix).
The question is – how do we instill confidence? Do businesses gain confidence due to people buying their products? Or through ideology? You may be right. Perhaps a business may think Obama’s got it wrong, even when people buying their products at a greater rate. Adam Smith might have some trouble with this line of thinking, but it’s quite imaginative. Usually businessmen are more practical (at least, that was his understanding).
But if you think that tax cuts work by putting more money in someone’s pockets to spend, you’re a Keynesian.
I guess we could argue more about if Obama is a socialist or not – but I don’t think it matters. David Frum, Richard Posner, Greenspan and other conservatives would disagree with you, even if they don’t agree with Obama’s economic plan. It still just seems like demagogic name calling than a useful descriptor of his policies. Perhaps “mixed economy” doesn’t have the emotional resonance. It’s easier to get people riled up with “socialism” because it just makes people afraid (you still never identified of what we should be afraid of, but I’m all ears. I tried to get you to admit that Amsterdam is your idea of hell).
I should have been more clear about the constitution. My point was that the constitution changes – as well as our interpretation because it has within it sometimes competing values. It had both values of liberty and equality – and they don’t always lead us the same direction (it’s an old political philosophy problem). But I admit a bit of confusion: how does one say that only constitutional amendments are legitimate while then saying that any one of them should be repealed. I don’t think that your solution to, for example, the 17th amendment would have the consequences you desire. I can easily imagine that modern senators, taking the long term view, might prefer, for example, the federal government bailing out the states. They might be MORE progressive, at which point i would suspect plenty of conservatives would want direct voting.
I’m struck by your antipathy towards Wilsonian “progressivism.” What you really seem to hate is the word. Now, I’m not a great fan of Wilson, but the evidence is that his policies helped businesses. Not powerful businesses, but farmers. He seemed to find ways to give more power to consumers. He also seemed to support the free market when he reduced tariffs of foreign goods (he was anti-protectionist). And I wonder what would have happened if he’d not reformed the banking system. Granted, I thought of him as an anti-socialist (remember the Red Scare?), but these are obviously historical trivialities.
Well, I don’t expect you to have much sympathy or understanding to the little guy. The economic fact is that the powerful bend the rules to their liking and find ways to get the government to protect them. Others resent the small amount that government helps the average American. Most businesses and individuals – somewhere along the way – have benefited from a stable government and government “hand outs” whether it be from paved roads, rural electrification, public education, publicly financed sewage systems or military research and development. The alternative?
And I guess we’ll see about November. Krauthammer recently argued that the right wing underestimates Obama at their peril. Perhaps if the Tea Party knew how to organize I’d concede that the Republicans would take both houses. I’m not going to prognosticate, but even Republicans in my neck of the woods still have some trouble with Sarah Palin.
You mention that you don’t think the progressives will honor the will of the people. I’m not sure what you mean by that. It sounds ominous. Are you saying that progressives are now taking advantage of gun laws to protect the state? It’s quite a fantastic theory. Most of the progressives I know are angry AT Obama.
It seems to me that that the tea party – and the Republicans – are the ones unwilling to negotiate within a democracy. Granted, it works to the Republican’s benefit to obstruct. Obama could put in a Republican bill, and the GOP would still oppose it. That’s politics.
Obama will be president until 2016 and by then you still won’t have been thrown into the gulag. And if you are, I’ll vote for the other party. I do think there are good reasons to critique Obama.
#19, please re-read the last line of my entry in #18. Matt 7:6.
#20 Matthew 5:44; Luke 6:28