Today’s Question
What small-business owners think.
In an article just published by The Times, Catherine Rampell notes that when it comes to optimism about the economy, there is a big gulf between small and large companies. Ms. Rampell reports that while measures of optimism for big companies now exceed prerecession levels, a recent survey from the National Federation of Independent Business found that expectations for business conditions six months from now were at their fourth-lowest level in nearly 40 years.
So why are small businesses so much more pessimistic?
The article offers a number of possibilities:
o Big companies have a larger global footprint and are benefiting from growth in places like China and India.
o Small businesses are more likely to be traumatized by the political confusion and uncertainty in Washington. “Politicians are uniformly quick to offer paeans to small businesses, but their actions have directly held back the sector, to the huge detriment of the economy,” said Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors.
o Owners who sell directly to consumers are concerned about the effects of recent tax increases, like the end of the payroll tax holiday, on their bottom lines.
o While commercial and industrial lending numbers from the Federal Reserve suggest that the credit market for small businesses is healing, many small business are still struggling to have their credit needs met.
The stakes would seem to be high for all businesses. “Until the small-business sector starts to feel better,” Mr. Shepherdson told Ms. Rampell, “the rest of the economy isn’t going to feel much better, either.”
How would you explain the gulf between small and large businesses?
Article source: http://boss.blogs.nytimes.com/2013/02/13/why-are-small-businesses-less-optimistic-than-big-businesses/?partner=rss&emc=rss
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