Tag Archive for 'Bill Dunkelberg'

Main Street, not Wall Street, is the leading economic indicator

What sector of the U.S. marketplace produces over half of the economy, signs the front of over half of U.S. private payroll checks, and is the perennial new job engine?

No, it’s not Corporate America or Wall Street banks. It’s Small Business America. If this sector were a sovereign country it would be the largest economy in the world.

So why does Wall Street, instead of Main Street, get all of the economic media coverage?

William Dunkelberg, Ph.D., NFIB’s Chief Economist, is the oracle of the Main Street economy. For more than 40 years his monthly Small Business Optimism Index has been the gold standard for this sector. Alas, since 2007 his Index has recorded an unprecedented cycle of sustained levels below the 40-year optimism average. Find the Index at smallbus.org and NFIB.com.  Plus Bill reports his findings on my radio program every month.

On the other end of the precious metals scale of small business polling, closer to the copper standard, is me. For several years my online poll has asked small business owners weekly about their take on the economy. Recently we asked which of five business issues is the most pressing:  cash flow, a business loan, more customers, Obamacare, taxes and/or regulations.

Here’s what we learned:

SmallTownUSA

One marker of sustained business success since 2008 is deleveraging, which manifests, in part, as improved cash flow. Consequently, when cash flow concern registers only a 16% response, and loan demand gets no takers, these are the two sides of the deleveraging coin. But low loan demand also means low growth expectation.

Obamacare barely moved the worry meter at 5% in our poll because this issue will be dormant until Q4 2014, when we learn what the 2015 employer mandate will cost.

The big concerns, more customers at 54% and taxes/regulations at 25%, can be taken two ways: No one admits to having enough business and no one likes taxes and regs. But based on the economic indicators of the first half of 2014, plus recent tax increases and out-of-control growth of regulations that disproportionately hurt small businesses, these are not gratuitous responses; they’re the true top concerns of small businesses. And they track with the NFIB Index.

As I’ve been saying since 2006, Wall Street is no longer a leading indicator of the economy; it’s now merely a leading indicator of itself. If you want to know the true condition of the U.S. economy, listen to Main Street small business owners.

Write this on a rock … The small business sector is now the true leading economic indicator of the U.S.

Jim Blasingame is the author of the award-winning book, “The Age of the Customer: Prepare for the Moment of Relevance.”

The big concerns, more customers at 54% and taxes/regulations at 25%, can be taken two ways: No one admits to having enough business and no one likes taxes and regs. But based on the economic indicators of the first half of 2014, plus recent tax increases and out-of-control growth of regulations that disproportionately hurt small businesses, these are not gratuitous responses; they’re the true top concerns of small businesses. And they track with the NFIB Index.

As I’ve been saying since 2006, Wall Street is no longer a leading indicator of the economy; it’s now merely a leading indicator of itself. If you want to know the true condition of the U.S. economy, listen to Main Street small business owners.

Write this on a rock …

The small business sector is now the true leading economic indicator of the U.S.

Jim Blasingame is the author of the award-winning book, “The Age of the Customer: Prepare for the Moment of Relevance.”

The facts on small business and banks

Listening to pundits and politicians, you’d think banks were intentionally hurting small businesses and the economy. When a Senator or “Talking Head” says, “This economy needs banks to start lending to small businesses again,” you might think they know what they’re talking about. They don’t.

The NFIB Small Business Optimism Index is the gold standard of small business surveys. If you track the monthly results of Dr. Bill Dunkelberg’s work on his Index, as I have on my radio program for more than a decade, you will see that throughout the entire period since the Great Recession began in 2008, more than 90% of small business owners have consistently reported that their “credit needs are being met.”

It’s true that the big banks curtailed lending while getting their own balance sheets under control. But out here on Main Street USA, if your small business qualifies for credit and wants it, you can get it from either an independent community bank or credit union, if not from one of the national banks. The problem is not credit availability; it’s demand. Like everybody else on Planet Earth, small businesses are deleveraging.

We wanted to know a bit more about the banking relationships of small business owners, so recently, on our website and weekly e-newsletter, we asked this question: “What type of bank do you do business with?” Here’s what we learned:

Our respondents who do business with a “large regional or national bank,” were barely more than those who said they trade with a “local community bank,” coming in at 38% and 36%, respectively. The third option of our poll, “a local credit union” – which are increasingly proving their relevance to small businesses – was chosen by 15% of our sample. And finally, a little more than one-in-ten said they needed a bank.

A week later, in a companion poll, we asked our small business audience: “Are you happy with your current banking relationship?” Seven out of ten said yes and 17% said no. And the group who said they “would change banks if they could,” came in at 13%.

The results of our unscientific online polls are backed up by the findings of several highly regarded surveys, like Dunkelberg’s NFIB Index: Main Street small businesses are dealing with many challenges in this not-so-great recovery, but access to credit is not one of them.

Uncertainty is suppressing small business loan demand, not banks.

I talked more about banking relationships recently on The Small Business Advocate Show. Click here to listen or download my conversation on how happy small businesses are with their banks.

For more great SBA content, click HERE!

Possible titles for “The Small Business Movie”

One of the great icons of Americana is Hollywood, including all the epic movies with almost breathtaking titles, like “Gone with the Wind.”

Among my favorites is a war movie with such a title, “In Harm’s Way.” A more recent one that isn’t a war movie, but has a compelling title is, “Against All Odds.”

If anyone ever made a movie about the American small business, either of these three would be a perfect title. Creating something from nothing in a rude marketplace - often with little or no capital, in the face of entrenched Big Box, local and Internet competitors - is as close to “in harm’s way” as you can get without dodging enemy fire. And against all odds, less than half of small businesses survive five years while less than one-third of those make it to the second generation.

If your small business has come through the Great Recession and the Not-So-Great Recovery, you’ve gone in harm’s way and survived, against all odds. And based on recent surveys - the very sophisticated and the not-so-very - many small businesses still have harm to avoid and odds to challenge.

The most recent and very sophisticated NFIB Index of Small Business Optimism reported that while optimism has spent many quarters below the 100-point historical baseline, the recent 0.4% rise to 94.5% score, means while we may not like the number, we like the trend. When most small business owners report optimism about their future, the gold standard NFIB Index will hit or exceed 100.

Recently, my not-so-very-sophisticated online survey of small business owners answered this question: “With two months of 2011 behind us, how is the recovery going compared to last year?” Those who said, “The economy is definitely improving” represented 28% of respondents. Those who said “Sales revenue is better, but the recovery is still slow,” came in at 43%. And the group reporting “Sales revenue is not growing,” was 30% of our sample.

Remember my two admonitions about dealing with this recovery: 1) It’s going to be a marathon. Pace yourself with discipline and patience; and 2) If you’re in the majority that isn’t feeling the recovery, find out what the apparently very happy minority is doing.

Here’s another epic war movie title I think you’ll agree would fit that small business movie, “The Longest Day.” It’s about what it takes to avoid being gone with the wind.

Recently on The Small Business Advocate Show, I talked more about The Small Business Movie - click on the link below to listen. I also talked with Bill Dunkelberg, Chief Economist at NFIB about their most recent Small Business Optimism Index. Click on one of links below to listen to our discussion. As always, please leave your comments.

NFIB reports on slow job growth and weak capital spending featuring Bill Dunkelberg
The NFIB index on sales, pricing power and credit featuring Bill Dunkelberg
Possible titles for a movie about small business featuring Jim Blasingame

The Dec 09 NFIB report of small business conditions

The recession may be over technically speaking, but that’s not how it feels to most small businesses on Main Street.  They’re still having a tough time getting enough customers to show up to grow sales and profits, and are not looking to make capital improvements or hire new employees to any great extent. 

It distresses me to report on this kind of news, but my job, as legendary sports announcer, Howard Cossell, used to say, is to tell it like it is. I believe 2010 will be a better year than 2009, but it doesn’t feel like that right now for many Main Street small businesses, especially retailers.

Of course, much of the small business conditions I report on comes from the high quality, peerless research of world-class economist, Dr. William Dunkelberg. Bill is professor of economics at Temple, chief economist for the NFIB and an invaluable member of my Brain Trust.  I used the word “peerless” earlier in referring to Bill’s work.  He has been tracking small business sentiments every month since 1971, throught all of the marketplace cycles. Any questions? 

Recently, Bill joined me on my radio program, The Small Business Advocate Show, to discuss in detail the results of the Dec 09 NFIB’s Report of Small Business Economic Trends.  Take a few minutes to listen to this conversation and, as always, leave your own thoughts on the status of the economy as it relates to your business. Listen Live! Download, Too!




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