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Economic confidence up while small business continues to drag

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Betsi Fores
The Daily Caller News Foundation

Despite the latest Gallup poll indicating economic confidence among Americans is near a five-year high and the soaring stock market, small businesses around the country are still struggling in the fallout of the financial collapse from 2008.

The latest survey from the National Federation for Independent Businesses has small business confidence up only slightly. Job expectations saw minor improvement, though not enough to keep up with population growth.

“With the dismal news that our economy actually contracted in the fourth quarter of 2012, it isn’t any wonder that more small firms expect their real sales volumes to fall, few have plans to invest in new inventory, and hardly any owners are expanding or hiring,” NFIB chief economist Bill Dunkelberg said in a statement.

“Owner pessimism is certainly not surprising in light of higher taxes, rising health insurance costs, increasing regulations and just plain uncertainty,” Dunkelberg also said.

Only 11 percent of small businesses reported adding employees.

“With an economy in the state that it’s in, taking on a new employee means more health care costs, means more workers, competition costs, means more equipment costs,” Toffer Grant, CEO of PEX Card, said to The Daily Caller News Foundation.

“It’s a double edged sword,” Toffer explained. “If they’re taking on staff, it also means that they think that it’s improving. So you don’t want to be caught in the situation where you don’t have to say no to customers because you don’t have staff, and you don’t want to be stuck in the situation where you’re taking people on where there may not be business.”

A survey conducted by PEX Card found that more than 60 percent of businesses of all sizes expect their spending to increase in 2013, including nearly 70 percent of businesses with 25-49 employees.

“I think overall people want very badly for there to be a better economy and are kind of tired of what we’ve been going through,” Toffer shared. “Things are a lot better then they were in the 08-09 period. I think a general optimism but they’re worried about all kinds of the details — they go day-to-day.”

Still, for the small businesses the employ the majority of all Americans, the outlook remains grim, according to Dunkelberg.

“Thirty-five percent expect conditions to be worse, 10 points better than December, but historically one of the worst readings in 40 years of survey history, rivaling the 1980 figures,” he writes.

“Many economists argue that what is needed is new firms to start and create new jobs. Nice idea, but it would take a net 1.6 million new starts (with an average of 5 employees) to employ the 8 million who lost their jobs in the Great Recession,” Dunkeberg continued.

A poll from late last year found that 55 percent of small businesses would not start their business in today’s climate.

 

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