Small Businesses Grow Wary; See Fewer Hires, Investments

CNBC ^ | 9 Oct 2012 | Reuters

[Qbert]

U.S. small business sentiment weakened in September for the fourth time in five months as fewer owners expected to add staff and make capital investments.

The National Federation of Independent Business said on Tuesday its optimism index fell 0.1 point to 92.8 last month.

The drop is a sign the U.S. economy is taking a hit from uncertainty over the possibility of tax hikes and government spending cuts next year, said William Dunkelberg, chief economist at the NFIB.

"Owners are in maintenance mode — spending only where necessary and not hiring, expanding or ordering more inventories until the future becomes more certain,'' Dunkelberg said.

[Snip]

Also holding back optimism, the share of firms planning capital investments in the next three to six months fell to 21 percent from 24 percent.

[txrefugee]

The forecast for Christmas sales is dismal. When families are paying these outrageous gas prices and food prices, frivolous spending goes out the window. A sure sign is the reduced volume of credit card purchases. U.S. families are finally realizing that the 12-20% interest charged by the credit card companies is highway robbery.

[Mr. Jeeves]

"Owners are in maintenance mode — spending only where necessary and not hiring, expanding or ordering more inventories until the future becomes more certain,'' Dunkelberg said.

And it doesn't help that commercial leasing brokers still think it's 2006, and price their properties accordingly. Of course, their property owners still have 2006 mortgages to pay off. But persistent high commercial rents in the face of all reason have blunted a lot of small business expansion plans. That bubble hasn't popped yet - because when it does it's going to take a lot of major players down with it.

[edcoil]

How does this square with a drop in unemployment claims to its lowest level in years?