Update on the Economy for Main Street Businesses
About a month ago I wrote about the economic outlook in the U.S. as “cautiously and tepidly optimistic.” About the best you could say was that economists were avoiding predicting recession — so I guess you could call the outlook slightly positive as of early December 2007.
Here we are a month later. Is the news any different?
The short answer: it’s hard to tell. When you try to sort through the complex financial issues and the obfuscating language that most economists and financial commentators use, you find certain common themes. First, there are the lingering effects of the housing market bubble. According to an article originally published at Entrepreneur.com:
Don’t look for housing to return to prosperity before midyear, if even then. “There’s not going to be a real estate bounce-back,” says Gerald Celente, director of Trends Research Institute, a futurist study group.
That same article predicts that oil and gasoline prices will continue to rise (but you probably already noticed that from the gas pumps). And competition for good employees (and thus the need to pay higher staffing costs) will continue to rise, too.
So, the news is not so good from the sources cited in that article.
However, the latest NFIB Economic Trends report says, in effect, “hold on there, things aren’t that bad.” It paints a different picture, suggesting that there’s a big difference between Wall Street and Main Street, and that the issues Wall Street focuses on are not affecting America’s small businesses in the same way.
The Discover Small Business Watch for December 2007 tends to confirm the NFIB outlook report, suggesting that small business owners feel relatively optimistic. However, that might change as the year end retail results are tabulated and the effects felt, says Sastry Rachakonda, a Discover executive:
“The mood remains cautious as fewer small business owners feel like economic conditions for their businesses are getting better. The mood could change either way depending on holiday receipts.”
So what are we are business owners to think? Should we invest and expand? Should we pull back and watch expenses?
Well, no matter how you look at it, no one is suggesting it’s the wild wild west and that you should go full guns blazing into expansion mode.
On the other hand, it’s important to sort out the difference between what you hear Wall Street saying and what the conditions are like for main street businesses. Wall Street doesn’t have the same interests as Main Street.
