Research >> Economics
NFIB Small Business Optimism Index dropped 0.2 points to 93.9
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Well, a processing error produced a few “interesting” results in the details in the August data such as a surge in job creation plans and major declines in reported sales. But with the correction, most of the 10 Index components were little changed, with the exception of expected business conditions 6 months ahead which gave up 8 points. This could have been a result of the pending government shutdown and the exaggerated political rhetoric spewed into the media, although there was no difference in responses among those received in the first 20 days and the last 10 days of the month.
The Optimism Index was basically unchanged, giving up two-tenths of a point, statistical noise. The only interesting change in the components was an 8 point deterioration in expectations for business conditions over the next six months. And why not, prospects for Washington “getting it right” are low. The Federal Reserve will persist, even though there is little evidence that they are improving employment. This creates heightened concerns for how their portfolio will be “managed”. The Federal Reserve is buying the equivalent of the Treasury issuance of debt to finance the deficit, not a promising situation. There isn’t much evidence that buying a trillion dollars-of bonds is improving employment. However, one can always argue the counter-factual, that without QE, employment growth would have been even worse. Certainly the rich would be poorer and big banks would have made less. But that’s not what monetary policy should be about. Fiscal policy? What a mess. No budget for years, sequester is now built-in…this is certainly not the way to run the largest enterprise in the world.
Consumers and small business owners are pessimistic, not expecting a “crash” in the economy, just accepting the notion that growth is going to be sub-par and that their government is likely to continue in dysfunctional mode. The misstatements and exaggerations and distortions being sold to the public are stunning, but after all, these are politicians. A desperation deal will likely evolve, and it will be poorly constructed and conceived as usual. This is a “game of thrones” indeed, and no one is really concerned about the peasants, the politicians just want to make their points.
Posted: October 8, 2013 Tuesday 07:30 AM