The Angry Future Expat

Recovery Summer! Small Business Haiku Edition

Posted in debt, Deflation, Lost Decades by angryfutureexpat on July 13, 2010

Next to the Fed’s flow of funds data, which tells us just how much debt has been written off and thrown into the secondary and tertiary collection markets, my favorite piece of economic data is the survey from the National Federation of Independent Business.  The NFIB is the Voice of Small Business, after all! But it shows what those on the ground are seeing in the economy.  And, as usual, and no surprise to those of us who think that recovery summer is bullshit spin, it ain’t looking too good or (.pdf report):

The National Federation of Independent Business Index of Small Business Optimism lost 3.2 points in June falling to 89.0 after posting modest gains for several months*. The Index has been below 93 every month since January 2008 (30 months), and below 90 for 23 of those months, all readings typical of a weak or recession-mired economy.  Seventy percent of the decline this month resulted from deterioration in the outlook for business conditions and expected real sales gains.

Ruh roh! And why?

The net percent of all owners (seasonally adjusted) reporting higher nominal sales in the past three months lost four points, falling to a net-negative 15 percent, 19 points better than June 2009, but still far more firms are reporting negative sales trends quarter-to-quarter than positive.  The net percent of owners expecting real sales gains lost 10 points, falling to a net-negative 5 percent of all owners (seasonally adjusted).

To put this in Haiku form:

Unemployed people

Have no money for products

Buy cheap Gin instead

Of course, since there are still some small businesses to be surveyed, they must be surviving somehow:

The weak economy continued to put downward pressure on prices.  Thirteen percent of owners (down one point) reported raising average selling prices, and 27 percent reported average price reductions (down one point).  Seasonally adjusted, the net percent of owners raising prices was a negative 13 percent, a two point increase in the net percent raising prices.  June is the 19th consecutive month in which more owners reported cutting average selling prices rather than raising them. Plans to raise prices fell three points to a seasonally adjusted net 11 percent of owners.

Or to put this in Haiku form:

Prices falling fast

Some customers would be nice

Deflation arrives

But small business owners are an inherently optimistic lot, and they’ll hold onto their people and try to position themselves for the inevitable upturn by making investments in their people and their businesses, right, right?

The frequency of reported capital outlays over the past six months was unchanged at 46 percent of all firms, two points above the 35-year record low (reached most recently in December 2009).

****

Average employment growth per firm turned negative in April of 2007 and has remained negative for 10 of the 12 following quarterly readings ending with a negative .18 in April (seasonally adjusted).   May and June show no reversal in the bad news, posting average declines of negative .48 and negative .28 workers per firm respectively.

Or to put this in Haiku form:

Debt all around me

Banksters take their monthly tithe

Who can I sell to?

Unless you’re in the business of selling to big businesses with massive hoards of cash, I’m afraid you’re out of luck.

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