A survey report (pdf) released today by the National Federation of Independent Businesses (NFIB) reports that their Optimism Index for Small Businesses fell in the 2nd Quarter. Very few businesses are adding jobs, and 15% are reporting declining sales.
The NFIB is pretty biased, so I read their reports with a grain of salt. Still, our anecdotal evidence from talking to customers is that small businesses are doing OK, but remain pretty cautious about the economy and their own prospects.
Paul Krugman had an interesting piece this week about the common business argument that the current administration’s “antibusiness” policies are depressing spending. His retort is that the problem isn’t that higher taxes are squeezing spending, but that lower sales are doing that. I have to agree.
Ironically, the NFIB report quotes Krugman as someone who doesn’t “get it,” while their own report shows that most business owners blame slow sales, not lack of capital, for their pessimism.
So, what can be done? Krugman says we need full economic stimulus, ostensibly by increased government spending in areas like unemployment benefits. But small businesses in the high growth categories (technology, services, etc.) aren’t stimulated through a small increase in spending by people who make $405 a week. Why can’t we both stimulate the economy and give small businesses better incentives?
