Here is my column from today’s Tennessean. Happy Father’s Day!
In its monthly surveys of small business owners, the National Federation of Independent Business found that small
businesses have been feeling a bit more optimistic the past two months.
The results seem to suggest that entrepreneurs are beginning to believe
that the worst may be over when it comes to the recession. But just
what will the recovery will look like? And what is the longer-term
outlook for the economy?The pace of the recovery will not be consistent for every business owner. This recovery is not going to be a case of a rising tide lifting all boats.
While
certain sectors of the economy and specific geographic regions are
showing some signs of improvement, others seem to be mired with flat or
even continued declining sales.Within
specific industries we are seeing inconsistent trends. For example,
while much of real estate and construction remains almost dead in the
water, those who work within the health-care segment of this industry
report improving performance.Business owners hold back
In
looking deeper into the results of the NFIB survey, there are signs
that this recovery may be a long, slow road. Even though entrepreneurs
feel more optimistic, they do not plan to increase hiring, build
inventories or resume capital spending anytime soon.Some
of their optimism may be coming from a realization that the cries in
the media that this was becoming the “next Great Depression” were
unsubstantiated exaggerations.“The
biggest concern on the minds of (business) owners is the weakness in
spending which has now started to turn up as consumers become less
concerned with proclamations of pending disaster for the economy — it’s
not going to happen,” said NFIB chief economist William Dunkelberg.However, the improvement in consumer spending shows little sign of creating a strong bounce in the economy anytime soon.
And
what can we expect for the long-term economic outlook? Understand that
economies are not just isolated to commercial transactions. There is a
strong long-term tie between our economy and our society and culture.
There are some signs that we may be in a period of fundamental economic
and cultural change.Things won’t be the same
The frenzied consumerism-driven economy that dominated our past decades may never return.
We
may emerge from the recession into a very different economic/cultural
reality. There are growing signs that consumers are becoming less
concerned with keeping up with the Joneses and more focused on becoming
frugal spenders.Opportunities
can still be found in such a transformed economy if it actually occurs.
The key will be to understand these changes and offer new business
models that respond to changing needs, preferences, attitudes and
consumer behavior.Entrepreneurs
have led the way with almost every economic recovery. Let’s hope that
their newfound optimism will soon translate into renewed and
sustainable economic growth.