The NFIB released their latest small business poll and it shows that small business owners are in a grumpy mood. One would think that they would be in a more upbeat frame of mind given the fact that they are planning to expand by hiring and creating new jobs.
So why are they so sour on things right now? Even though they want and need to hire, they are finding significantly higher labor costs and fewer qualified workers. They also are needing to borrow more money, but finding it slightly more difficult to do so as banks tighten credit in reaction to a weaker economy. They would like to increase prices to offset weaker sales, but we all could tell them that that will never work.
Overall so far in 2006 they have had a generally good year in terms of profits and sales. But, they just don’t have the cash in the bank one would expect from a good financial year, according to their reports on liquidity.
The Tatum Partners, a firm that provides temporary executive and executive services to companies, finds in a survey of their partners that the economy is getting weaker:
Overall conditions are flattening out at what we believe to be a sub-2% GDP growth rate in the third quarter, probably closer to zero. Residential housing is retreating particularly in markets that had experienced irrational exuberance in the past three years resulting in a speculative bubble that has burst. Commercial and industrial construction markets have remained relatively strong. We continue to sense the most probable near term outlook is for a soft landing with very slow growth in the third and fourth quarters.
Even though employment remains fairly strong right now and commercial real estate is healthy, they may be lagging indicators. All other signs indicate a rocky road in the months to come.