Tag Archive for 'economic outlook'

Is 2016 trending as the year of our next recession?

One of the distinct markers of the United States is what has been termed our “consumer economy.”

It’s pretty intuitive.

Having a consumer economy means that the main driver of GDP (gross domestic product), and therefore, the engine of economic growth, comes from spending by consumers. Other major elements that make up the entire U.S. economy include private investment, government spending and trade.

America is not unique in this distinction, but no other major economy in the world compares to the U.S. in this definition. For example, American consumers represented 71% of GDP in 2013, having risen from 62% in 1960. Around the globe, Japanese consumers are 61% of their economy, with only 36% in China. And in the major European countries, consumers average less than 60% of GDP.

The U.S. has experienced an increasingly robust consumer economy for generations. But one of the implications that has arisen for, let’s say, the past half century is that consumers are more likely to spend their money than save it. There are many reasons for this imbalance: America is the strongest economy in the world; has a diverse credit industry with creative products; and produces and imports a lot of cool stuff, which Americans want even if they have to borrow, instead of save, to get it.

The world economy has long benefited from the exuberance, rational or not, of the U.S. consumer. Indeed, during the global slowdown of the late 1990s and early 2000s, the U.S. consumer almost single-handedly kept the global economy from collapsing. But today, with a declining global economic scenario, will American consumers reprise their earlier role as economic champion? A new data point may provide that answer.

Recently, in our online poll, we asked small business owners if the significant drop in gasoline prices ($1/gallon in six months) was manifesting as increased spending by their customers. Less than one-fourth of our respondents reported such a trend was evident or slightly evident, while almost half said they saw no such evidence.

One of the reasons for the consistent moribund U.S. economy since 2008 has been the debt-reducing behavior of both American businesses and consumers. But it now seems the consumer’s cash conservatism continues unabated because, in addition to our poll results, other surveys indicate people are using the gas price dividend to reduce debt and save.

During the first quarters of 2014 and 2015 the U.S. economy went negative, producing one half of a technical recession, while the Dow Jones Index rose to new record highs. But 2016 has begun with stock indexes retrenching toward bear territory, a decline in both imports and exports, and no apparent help from consumers. Consequently, a negative Q1 this year may prove to be just the first one, rather than a one-off like the past two years.

Write this on a rock … The best way to not participate in a recession is to be prepared for one.

Small Business Advocate Poll: How would you respond if a presidential candidate asked your economic outlook for 2012?

The Question:
If a presidential candidate asked you how the economy is looking for your business in 2012, what would you say?

12% - We are expecting significant growth this year

55% - We see signs of improvement, but nothing significant

33% - We’re still waiting on the recovery to start

My Commentary:
No less than six people are crisscrossing the U.S. at this moment with the same thing on their mind: The desire to be elected President on November 6. The Republicans have four candidates, Romney, Santorum, Gingrich and Paul; the Libertarian Party candidate, Gary Johnson; and, of course, the incumbent, Barack Obama.

There are many issues that have been debated and which are part of each hopeful’s stump speech; but none more than the economy.

So where are America’s small business owners likely to fall on this most-important topic? We wanted to know what reaction a presidential candidate would get from a small business owner out on the hustings, so in our unscientific online poll we asked that very question: “If a presidential candidate asked you how the economy is looking for your business for 2012, what would you say?” Here’s what you said.

The big group, 55%, said “We see signs of improvement, but nothing significant.” The next largest part of our respondents, 33%, lamented, “We’re still waiting on the recovery to start.” The smallest group, only 12%, said “We are expecting significant growth this year.”

We’ve been polling small business owners online with questions about the economy and their businesses for over two years, and the numbers have not changed very much. But the most compelling finding in our economy-focused polls has been that when you combine those who are doing just okay and those who are still struggling, the number has consistently been between 75%-90%.

There are 28 million small business owners in America and another 70 million who work for small businesses. Based on our polling responses - which compares closely to several scientific small business surveys, including the gold standard, Dr. Bill Dunkleberg’s NFIB Survey of Small Business optimism - it seems clear that the now-famous slogan of Bill Clinton’s former political advisor, James Carville, “It’s the economy, stupid,” may be more valid in 2012 than it was 20 years ago when the term was first used.

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Yesterday on my radio show I talked more about how small businesses feel about the economy and why politicians should pay attention. Take a few minutes to click here and listen or download.

Check out more great SBA content HERE!

Take this week’s poll HERE!

Small Business Advocate Poll: What’s your 2012 outlook?

The Question:

Are you seeing indications that 2012 will be a better year for business - sales, profit, etc. - than 2011?

52% - Yes

29% - No

19% - Uncertain

My Comments:

Almost 20% said they were still uncertain about next year. And almost one-third said they were certain things were not going to be better next year. But a little over half, 52%, said they were seeing positive growth indicators for next year.

Now, 52% isn’t exactly a rousing expectation of runaway economic expansion, but based on other questions we’ve asked in the past two years along these lines, it does represent a shift in optimism.

And my own experience tracks with the majority here. It does seem that, in the face of plenty of scary things, 2012 could be better than 2011. I’ll have more to say about this soon.

Check out my recent audio commentary on small business growth plans for 2012. Listen or download.

Take this week’s poll HERE!

For more great SBA content, click HERE!




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