Many sources are reporting how the economy seems to be finally gaining some momentum. We wanted to know what you thought about these reports, so last week we asked how the New Year was looking. As you can see, the ratio of responses hasn’t changed much from past polls. This tells me after six years of a moribund economy most small business owners aren’t going to get excited until they can confirm that economic momentum has reached all the way down to the last mile of Main Street.
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As you can see, over half of our respondents are either indifferent toward, or negative about the impact of the Political Class on their business. The rest are hopeful about their business because of the upcoming Republican-controlled Congress. Alas, the Dems got no love in this poll.
**Photo credit to Donkey Hotey on Flickr.com. Image links to page. (CC).
Here are the results of my 2014 predictions, what happened and my score.
Prediction: Five years after the Great Recession ended, the economy will average less than 3% growth. Actual: Although surging, 2014 GDP will be about 2.3%. Plus 1.
Prediction: Even with a slightly improved economy, small business (SB) optimism levels will still be below the NFIB Index’s 41-year average of 100 points. Actual: NFIB Index 2014 SB optimism is below 95 points. Unfortunately, plus 1.
Prediction: Continued uncertainty for the sixth straight year will make SBs reluctant to invest and borrow money. Actual: NFIB Index shows small businesses loan demand and investing at record low levels. Plus 1.
Prediction: Uncertainty about Obamacare’s impact will cause SBs to continue hiring reluctance. Actual: NFIB and other surveys shows SB hiring still negligible. Plus 1.
Prediction: Obamacare will continue to be an economic headwind in 2014. Actual: Owners and managers continue to identify Obamacare as a significant negative factor in business decisions. Plus 1.
Prediction: More significant than the media favorite U3 unemployment rate, the employment participation rate, currently 63%, will remain at a 38-year (Carter) record low. Actual: Current labor participation is 62.8%. Plus 1.
Prediction: The Fed will discontinue unprecedented quantitative easing (QE) that infused trillions of dollars into Wall Street since 2008 without benefiting Main Street. Actual: Fed ended QE in October. Plus 1.
Prediction: A combination of disruptions will produce a challenging year for Wall Street. Actual: Nothing seems to impede the madness of Wall Street crowds. Can you say bubble? Minus 1.
Prediction: Obamacare’s constitutionality will be challenged by many lawsuits. Actual: Currently 104 lawsuits have been filed against Obamacare, including one before the Supreme Court. Plus 1.
Prediction: Democrats running for re-election in 2014 will run from the president. Actual: No Democrat wanted Mr. Obama anywhere near their campaign, but it still didn’t help. Plus 1.
Prediction: The GOP will regain control of the Senate and maintain a majority in the House in November. Actual: Republicans swept almost everything, from the Senator down to dog catcher at the local level. Plus 1.
Prediction: President Obama will prevail on immigration but will lose on minimum wage. Actual: Immigration win by Obama’s executive order but no minimum wage increase. Plus 1.
Prediction: Hillary Clinton will not announce her 2016 presidential intentions before the mid-term elections. Actual: Everyone knows she’s running; she just hasn’t announced yet. Plus 1.
Prediction: Auburn will defeat Florida State in the BCS Championship Game. Actual: Great game, but the Noles won 34-31. Minus 1.
Write this on a rock …
This year I’m 12 for 14, or 86%, taking my 14-year record to 73% (’08 was a rough year).
Jim Blasingame is author of the award-winning book, The Age of the Customer: Prepare for the Moment of Relevance.
When we asked a similar question in early September, 65% of you said things were trending well for the end of the year. As you can see, our new poll question on the economy prompted just short of that response, at 61%. And just as we’ve seen for almost six years, about one-fifth of small businesses are still struggling.
1. Republicans will be in control of both houses of Congress for the next two years. Most people who make payroll consider a GOP-led Congress to be an improvement if for no other reason than they’re not anti-business.
2. Gas prices are down almost a dollar from a year ago. That’s like a huge tax cut for the folks on both sides of the cash register.
Here’s hoping the winter isn’t too bad and we can carry some momentum into next year.
How’s the economy going?
In my long career, it’s hard to imagine a time when you could get as many different answers to this question.
We know the answer if we’re talking to any of the millions of chronically unemployed or under-employed; they’re not represented in the misleading U3 unemployment index used by politicians and the media. And the same goes for the millions who were forced to transition from unemployment to early retirement, disability or welfare.
How about small business owners? Recently we asked them this question: How is the economy looking for you over the last third of 2014? Almost two-thirds of our respondents allowed they like what they see. That’s an improvement from polls we’ve conducted over the past couple of years when barely half expressed optimism.
Are small businesses finally feeling more confident about the economy? For generations Wall Street was accepted as a leading indicator of the economy; today it’s merely an indicator of itself. I consider Main Street to be the more relevant economic indicator so this increased optimism is good news — at least until Wall Street and Washington do something to derail all of our hard work, like the last financial crisis they created together.
In a follow-up poll we asked small business owners how they would fund their next growth opportunity. Almost half reported they would grow organically with retained earnings (profits) and current cash flow. And consistent with previous polls by myself and others, only three percent chose the historical small business funding source: a bank loan.
Ironically, this growth-by-bootstrapping response is a silver lining of the financial crisis cloud. As I predicted in 2009, in order for small businesses to survive the Great Recession they had to operate more efficiently while reducing debt, which produced two very important financial conditions: 1) a better cash position and 2) more profit. Consequently, it’s not surprising when almost 50% of respondents to this poll reported the ability to capitalize future growth with in-house resources.
Unfortunately, small business retained earnings alone won’t take the economy from moribund recovery to robust expansion. That will require Corporate America to stop hoarding cash and start investing in the economy. The question is, when will Wall Street let them?
Write this on a rock … Small business alone can’t fund an economic expansion.
Jim Blasingame is author of the award-winning book The Age of the Customer: Prepare for the Moment of Relevance.
Small business owners are worried about world affairs.
In a recent online poll we asked our audience about that and almost three-fourths are either very or extremely concerned about the state of the world.
In recent years terrorists have inverted this reality by employing to murderous advantage two icons of the very society they claim to hate: technology and markets. But just as these icons are ironic levers for terrorists who place no value on life, they become benevolent tools in the hands of those who do.
Indeed, when tolerant humans use technology and markets they do three very good and peaceful things: communicate, conduct business and share values. The 19th century French economist Frederic Bastiat observed that when goods cross borders, armies don’t. He couldn’t have imagined that today, thanks to technology, goods — and values — cross borders at the speed of light.
Traveling abroad I’ve learned when small business owners in different countries know each other they discover more in common than not. I submit that a small company in Kankakee, Illinois, connecting with an e-commerce customer in Kabul, Afghanistan can, over time, neutralize impediments to peace. And when a Main Street business in Bangor, Maine, shares a best practice with a peer in Baghdad, Iraq, ugly hatred morphs into the beauty of shared values.
The 18th century Irish philosopher Edmund Burke said, “All that is necessary for evil to triumph is for good men to do nothing.” Regarding the current debate about “boots on the ground,” there is no greater army of good men and women than small business owners around the globe leveraging technology to do business and share values across borders.
The carcinogens that metastasize into terrorism are ideology, ignorance and intolerance. But since centuries of politics and wars haven’t solved the conflict riddle, is it ignorance or ideology when western leaders don’t include in their peace strategy a potentially powerful and abundant force: small business trade?
Many organizations that have members who are Main Street business leaders can be used to promote business boots on the ground virtually anywhere in the world. The first two President Blasingame would deploy are local Chambers of Commerce and Rotary International.
Write this on a rock … Fight ideology, ignorance and intolerance with small business trade and shared values.
Jim Blasingame is the author of the award-winning book, “The Age of the Customer: Prepare for the Moment of Relevance.”