Research >> Economics
NFIB Small Business Optimism Index fell 1.3 points to 94.8
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The Index of Small Business Optimism was fell 1.3 points in November, dropping the Index to 94.8, this after three months of no change of any significance. Clearly the small business sector has no expansion energy. Still well below the 42 year average, the Index continues to signal a “plodding” economy, responding to population growth and a growing replacement need as the capital stock ages. Auto sales remain strong, sold and serviced by small businesses, but produced by large manufacturers. The services sector has been showing more life, a small business domain, while manufacturing has faded. Overall, going nowhere and not quickly. Growth in the fourth quarter is likely to come in between 2% and 2.5%.
In this “Season of Hope”, small business owners are finding little to be hopeful or optimistic about including the economy in the New Year. Society is showing stress fractures all around, on college campuses, mass shootings, terrorist attacks, major cities and their police forces, scandals and incompetence rampant in D.C., a Justice Department politicized, a political IRS and EPA running roughshod over individual rights and personal freedom, a Fed that can’t make up its mind about 0 interest rates “for too long”, a Congress that can’t seem to stay in the “power ring” with the President for a round, a President who thinks that our most important problem and threat is climate change (formally known as global warming) and is willing to punish the current economy for inconsequential benefits in the future just to set an example for the world (right!). It feels like we are starting to “lose it”, to dissemble.
Well, the news isn’t all bad. The stock and bond markets are at record high levels. Unfortunately that means the downside risk is HUGE! The dollar is strong and we are doing much better than most countries around the world. OK, that’s good, relatively speaking. The current NFIB survey reads are generally the best in this expansion, although historically below average in the 42 year history of expansions. The 1983-90 expansion created 689,000 jobs per quarter compared to 439,000 in this expansion, 2009Q3 to the present - all that with a 30 percent smaller labor force back then. Of course, the economic policies in place under Reagan (like “tax cuts”) were very different than those of the current Administration. That might have made a difference.
Overall, the outlook remains about the same, slow 2 percent-ish growth, payroll employment growth averaging around 200,000 a month, 100,000 in the Household Survey (enough to keep the unemployment rate around 5 percent), not much pressure on prices from Main Street. Just hoping for a Happy New Year to show up.
Posted: December 8, 2015 Tuesday 07:30 AM