By John Galt
June 14, 2011
The NFIB monthly Economic Trends Report for Small Businesses has been released and the information contained within offers little reason for optimism as reflected by their data. Small business optimism dropped again in May with a myriad of reasons being provided to indicate that small business will be limiting expansion and is indeed following our Irish brethren (see this posting) in moving into the “hunker down” or survival mode. The lack of optimism and apparent economic headwinds is reflected in this chart from the report:
The drop in optimism could just be a short term indicator but the decline which began in January has continued and might begin to accelerate as the new regulatory regimes are implemented and announced throughout the summer of 2011. As a result, the lack of plans to expand hiring and increases in small business expansion should not be a surprise as demonstrated in this chart from the report:
I have inserted two red lines into that graph to point out that the numbers provided in the survey indicate that the planned hiring levels and current job openings have declined to levels close to January 2009 when the recession was at its worst. This trend appears to be moving forward unabated by any action in Washington, D.C. as local economies are still struggling to recover in many parts of the country.
In this author’s opinion this is a forward looking indicator and a potential further validation of the recession I project to begin in late Q3 to Q4 of this year creating the conditions for the perfect economic typhoon to change our nation forever.