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Archive for the 'Economy: National and Global' Category
The Question:
With the first month now behind us, how is your business shaping up for 2013?
3% - 2013 is already shaping up to be a great year for us.
8% - We’re definitely seeing improvement and expecting a good year.
55% - We think things are improving, but still too soon to tell for sure.
34% - We’re not seeing any improvement in the economy.
My Comments:
Summing up our responses this week, we’ve got barely more than 10% of our respondents getting off to an optimistic start, with the rest - 89% - still not seeing the economic good news they long for.
What can I say? Small business owners are pathological optimists. They’re like thoroughbred horses - they don’t want to be held back, they want to run. So you have to really work hard to create the kinds of conditions that cause America’s entrepreneurs to consistently report in survey after survey the level of disconcert for now more than four years. Alas, the Political Class in Washington seem to be uniquely qualified to create the conditions that turn the greatest community of entrepreneurs from optimists into pessimists.
Who elected these guys, anyway?
The Question:
The economy experienced negative growth in the 4th quarter. A recession is two negative quarters in a row. From your perspective, what is the likelihood of another recession?
4% - Zero - It was just one bad quarter and won’t be repeated
30% - 50% - This economy could go either way
39% - 75% - This economy is very fragile
26% - 100% - We may already be in a recession
My Comments:
Recently, we learned that GDP went negative in the fourth quarter of last year. There are many factors contributing to this drop in economic performance: decreasing defense spending, a drop in inventories and exports, Hurricane Sandy, and an election.
That last point is arguably the thing that influenced almost every American the most. We had what I believe to have been the most emotional national election in my life, that didn’t go the way at least half of us wanted, and we knew that almost two months before the end of the quarter.
A negative growth quarter in the U.S. is serious, since the definition of a recession is two consecutive negative quarters. So, when 96% of the sector that’s made up of the most pathologically optimistic of all humans - small business owners - say we have from a 50% to 100% chance of another recession, that’s not good news.
Unemployment just went up – to 7.9%. The economy just went down – negative growth in the 4th quarter 2012. Consumer confidence (Conference Board) and small business optimism (NFIB) both are down.
The government is experiencing annual operating deficits of over $1 trillion and the national debt, over $16 trillion, is on par with GDP. Let’s put that last number another way: if the U.S. were a business, it would owe as much as it sells.
With this set of realities facing our nation, it’s interesting that President Obama chose to say very little about the economy in his second inaugural address, but did talk about his climate change agenda. We wanted to know what small business owners think about the president’s priorities, so last week we asked this question in our online poll: “The President said climate change will be a major focus of his second term. What do you think?” Here’s what we were told.
Those who said, “I agree. Climate change is our greatest problem,” came in at 6%. The middle group, at 38%, believes the president “… should focus on economy recovery more than climate change.” And 
the rest, 56%, allowed that Mr. Obama “… should focus on the deficit and debt more than climate change.”
Clearly President Obama is watching a different ballgame than 94% of small business owners, plus we just learned that his Jobs Council was disbanded after two years. This 25-member committee is noteworthy because of the make-up of the roster: big business CEOs (16), venture capitalists (3), academia (1), politics (1), union bosses (2), and 1 – count them, ONE – small business owner.
That’s right, the group that signs the front of the largest batch of payroll checks (70 million) every week in America and has created almost every net new job for more than a generation was represented on the President’s Jobs Council by one very brave small business owner, Darlene Miller, CEO of Permac Industries, Burnsville, MN 55306. Permac has 30 employees.
Miller has been a guest on my radio program and recently told me she believes the Jobs Council actually did create jobs. But if that’s true, with more than 20 million Americans still unemployed or underemployed, shouldn’t it still be in business?
Well, the truth is the president doesn’t need a Jobs Council to create more jobs. He just needs to spend his efforts on policies that make America’s job creators think he’s watching the same ballgame as they are.
Small business owners will create more jobs when the government stops acting like it’s working against them.
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Recently on my radio program, The Small Business Advocate Show, I also talked about the lack of businesspeople in President Obama’s cabinet plus the failure of the Jobs Council with Rick Newman, chief business correspondent for U.S. News & World Report. Click on one of the links below to hear what he and I had to say. I’m also interested in what you think, so please leave a comment.
Why no business people on Obama’s cabinet? with Rick Newman
Obama is not watching the same ballgame as small businesses with Jim Blasingame
In America, there are 20 million small business owners who can be further classified as independent contractors (IC).
These entrepreneurs are sole proprietors, consultants, freelancers, or anyone who works alone, without a net, on the marketplace high-wire. When the person coined the term, “Eat what you kill” he was talking about this hardy group. On the scale that measures financial and professional risk, with 10 being “made in the shade,” and 1 being “OMG,” ICs begin with a 0.1 rating and 90% never get above a 2.
One of these ICs is Phil Mickelson, professional golfer.
Mickelson, 42, is a very successful IC: World Golf Hall of Fame, short list of “Greatest Golfers of All Time” and the greatest left-handed player. “Lefty,” has won 40 PGA tournaments, including four majors, career prize money over $67 million and annual endorsements estimated at $50 million.
Just like other ICs, and unlike NFL, MLB and NBA players, Mickelson has no guaranteed contract. If he plays poorly the first two days of a tournament he is “cut” and leaves without a paycheck. And if his poor play continues long enough, not only do tournament earnings diminish, but endorsements as well. “Phil the Thrill” has earned his wealth.
Recently this native Californian made news by voicing concerns about his state’s increasing income tax rates, that with Federal rates, conservatively puts him well above the 50% level. He lamented that he might have to move, or maybe even retire. If he lived in a state with no income tax, like Texas or Florida, his tax bill would drop more than $7 million.
Many in the press were critical of Mickelson for his comments, saying he shouldn’t complain since after all, how many millions does anyone need? But this is America; we have the liberty to earn and keep as 
much as we can, the right to voice our displeasure when the government is taking too much, and not apologize for either.
Small business owners agree with Phil and Supreme Court Justice Louis Brandeis, who wrote that while tax evasion is illegal, tax avoidance is commendable. Mickelson’s comments on high taxes were commendable, honest and courageous – too bad he later apologized.
We have just learned the U.S. economy had negative growth in the fourth quarter. One big reason we may now be slouching toward a double dip recession is because small business owners, like Mickelson, are shrugging in response to anti-growth tax and regulatory policies.
A small business owner’s motivation to take risks is in direct proportion to the level of government interference.
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Recently on The Small Business Advocate Show, I talked with a couple of pretty smart guys who defend Phil Mickelson’s comments, his right to say what he did, and why his position is on target with small business optimism and growth in the U.S.
Cliff Ennico is a lawyer specializing in legal and tax issues for small businesses, and is a popular instructor at eBay University. He is a frequent contributor to Entrepreneur magazine and the author of The ebay Seller’s Tax and Legal Answer Book and Small Business Survival Guide. His weekly syndicated column, Succeeding in Your Business, appears in dozens of newspapers and websites.
Rick Newman is chief business correspondent for U.S. News & World Report and author of Rebounders: How Winners Pivot from Setback to Success.
Click on one of the links below to download or listen. We’d also like to know what you think, so please leave us a comment.
So what’s wrong with what Phil Mickelson said about taxes? with Rick Newman
In defense of Phil Mickelson and other small business owners with Cliff Ennico
Why Phil Mickelson was right about taxes with Jim Blasingame
