Skip to comments.US Small Business Optimism Improves, Ending Five-Month Skid
Posted on 03/14/2019 3:42:41 PM PDT by spintreebob
Optimism among small companies in the United States improved in February, snapping a five-month losing streak that was the longest in two decades on brighter views of future conditions.
The National Federation of Independent Business optimism index rose to 101.7 from a two-year low of 101.2, according to a report March 12. Five of 10 index components improved, including views about the current environment for expansion and capital spending plans.
The measure is showing signs of stabilization after the government shutdown and remains at a historically elevated level despite cooling from a record 108.8 in August. Now that the government is funded, owners should be getting back to business with the rebound in consumer sentiment, survey authors William Dunkelberg and Holly Wade said in the report.
Earnings trends took a hit as a million laid off workers and others affected by the shutdown cut back on spending. While some indicators point to a softer start to this year, including the March 8 jobs report showing February payrolls growth was the weakest in more than a year, consumers remain upbeat amid a resurgent stock market and steady job gains.
Americans are the most confident about current conditions in 18 years, Conference Board surveys show, and the Bloomberg Consumer Comfort gauge is at the highest level since late 2000.
Oh bull stuff!
Small business never had it so good, and they damn well know it.
Fed chair Jerome said some poorly chosen words last October and turned a normal correction into a major slump. This major slump was touted as the start of a recession despite no evidence of such outside of the stock market correction.
Many small businesses believed the media bears, even though their personal experience was a bull.
The end of December Jerome corrected his October statement and immediately the stock market took off. And the Optimism took off. Hopefully the media crying wolf innoculates us all from believing every recession they say has started.
However, the trade war is actually hurting the economy and could actually cause the unwanted. Previously it was win-win with China winning more than the US. Now it is lose-lose with China losing more than the US. Will China feel the pain and change its ways?
I remain unconvinced we are losing.
Our numbers just aren’t tanking.
China is in a world of hurt right now, and it looks to get worse if Trump holds tough.
The US economy as a whole is booming. But there are specific factors that restrain certain areas from enjoying that boom.
Manufacturing assembly: There are manufacturing companies that specialize in importing parts and then assembling them. With imports restricted, and maybe restricted more in the future, companies are not willing to pay the price to import and then expand to meet the demand.
The hope is that US manufacturing will emerge to replace the imported parts. To a very small extent that is true. But increased US manufacturing is filling only a small percentage of the demand.
Investors do not want to invest in a policy that might change in 2021 or 2025. For example, I used to work in a plastics factory that did 3 types of plastics molding.... a total of 50+ molding machines that each would cost hundreds of thousands of dollars. A robot could do what I did. That would be a million dollar machine.
Who wants to risk that investment?
Employment is a second area where the demand exceeds the supply and is constricting the total market. IT shops cannot find competent workers. My shop signed a $100 million contract with IBM. IBM knew since Jan 2017 that they would get the contract and had our money by May 2018 to hire for the contract.
From May 2018 to March 2019, for a project that will require 50 to 100 IT workers, they have only found 5 or 10 really competent workers. They have hired and fired for incompetence about 50. Yesterday they finally fired as incompetent a person who has not delivered a single useful thing since he came to the project 10 moths ago. He has been carried on the project at $150,000 plus for 10 months.
They have another 20 - 30 people on the project who still have time to prove themselves.
I have seen projects shipped to India because they could not staff up. For legal reasons, this has to be done in GA and will be done in the IBM Smyrna office (western suburb of Atlanta).
Our K-PHD public education system is giving MIS and other IT degrees to people who cannnot read the manual, who cannot google and read documentation on the internet, who cannot play the Sesame Street game “two of these things belong together. One of them is not the same.”
I volunteer to “educate” those who are half-competent. My team lead is afraid that will just encourage IBM to hire more half-competent people.
It is economic fact that that will happen - not hope. That is why every country we trade with practices mercantilism when it comes to trade with the USA. The evidence is everywhere! Name one country where they charge less of an import tariff than the USA ( The USA average import tariff is < 2%).
With imports restricted, and maybe restricted more in the future, companies are not willing to pay the price to import and then expand to meet the demand.
A tariff restricts nothing. And secondly your poppycock statement flies in the face of the data.
I don’t think you ever get everything right.
We were being taken to the cleaners by China. We had to do something. We did.
Before we did something, others were taking it in the shorts. Someone always is.
Yes, you’ll have people who decide not to invest in one thing, but they’ll invest elsewhere.
We simply cannot allow China to game us like it was. Part of this goes beyond trade too.
By exerting pressure on China, Trump is causing them to have financial problems. To what extent I don’t know, but I am led to believe China is not in a great position right now.
Again, is everything perfect here? I wouldn’t argue that, but I do think it would have continued to get worse, if we hadn’t taken some action.
A lot of money is coming back to the state. Foreign companies are opening new plants here. Our manufacturing jobs have increased markedly.
As for our schools and the product they are putting out, they are putting out just what they want to. They are putting out untrained people who have been brainwashed. Those people have no clue that they are any different than past generations. They are. It’s shameful.
They don’t know enough to judge how badly they have been failed, so they blame everyone but the people who actually did it to them.
No, they still think those people are heroes.
IMO < our education system is a criminal enterprise, at least in part.
Agreed on our public shool system.
I went to GA’s Cumberland Mall to drop off my wife. Every parking lot was filled. The outlots were filled. There were nundreds of cars blocking the aisles, waiting, looking for a parking space.
Too many people are flush with money to spend.
Is there too much winning?
(except the parking lot beyond the former Sears had empty spaces. Proves it is not the economy that did in Sears. It is middle management that did in Sears.)
I went to a mall in Montebello recently, and I was shocked at the number of vehicles there.
They have a massive amount of parking there, and as you said, people circling for a space to park. It too me 25 minutes of circling to find a spot.
Speaking of flush with money, it never ceases to amaze me how the very expensive real-estate still manages to move.
I couldn’t afford these prices in my wildest dreams (okay, overkill), but the market isn’t flush with languishing real-estate.
As for Sears and Penny’s (or was it Montgomery Wards) and their big mail order catalogues. They were a no-brainer to go online, and they took a pass.
eBay and Amazaon cleaned their clock, and even upstarts HSN and QVC did as well.
Illinois and Rust Belt cities are not doing so well. Based on the big numbers coming south, there are few jobs up there. I left Chcagoland in 2013.
I consulted to Sears home office, 2 consulting trips. One was when the Brennan Brothers ran Sears and Wards. Brennan was also treasurer of the RNC representing IL and ran the IL GOP money.
Brennan lived in the 1950s in more way than one. Martinez followed Brennan. Then a long string of good top execs. Middle management refused to implement top management’s good ideas.
My team leader and team wanted to stock Levi and Lee jeans, shirts, etc direct from the supplier to the store. Levi and Lee wanted to do it that way. My CICS-DB2 system could reorder for each store in real time.
Middle management insisted or re-ordering from the Quarterly report which they got mid-month of the next Quarter. They were ordering Back-to-School replenishment in mid October when they needed to do it in mid-August when my realtime system could say what style was hot and what wasn’t.
I sat beside a young team that wanted and had coded and ready to install a Sears Catalog online, housed on the CLOUD known as ADVANTIS that Sears and IBM jointly owned. Sears middle management could not conceive of photos on the internet. They could only think of our 16 color character based dumb terminals.
Sears and IBM had no clue what to do with their CLOUD that had several big banks, other retailers, IT consulting firms, as well as the Sears family of Coldwell Banker, Allstate, Discover Card, Homart, etc. We coders loved it because we had open source COBOL and SQL between everyone on ADVANTIS. We could hop from consulting assignment to consulting assignment and be up to speed immediately.
Sears and IBM bought Prodigy as the same time, which was at that time bigger than AOL. They did not know what to do with it.
Middle management was motivated to maximize the size of middle management keeping chairs warm.
I keep hearing about problems in the Midwest, or Rustbelt, or some other place, but the polling figures are showing strong support for Trump in those areas.
I’m not quite as sure specific to the Rust Belt (because I don’t know exactly what the parameters are), but Trump isn’t languishing for support > IMO.
As for the comments you provided regarding poor leadership, it just baffles me to hear that. It’s obvious something along those lines had to be happening, but it’s downright painful to realize how out of touch those folks were.
Recently I say “Rust Belt Cities” and “Illinois”. People are fleeing IL from inner city, bungalow neighborhoods, suburbs, exurbia, downstate....everywhere. Jobs are fleeing all parts of IL.
But here in Atlanta there are far more license plates from OH and PA and NY. They seem to mostly be from inside the cities, the Clevelands, Akrons, Toledos, Pittsburghs, Schenectedys, Rochesters, etc. But maybe that is because I am inside the city of Atlanta.
If I were to go to growing Buford or Forsyth, growing suburbs, I might see suburban Ohio.
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