Feb 12, 2019

Main Street pares back its economic outlook

Data: National Federation of Independent Business; Chart: Andrew Witherspoon/Axios

Small business optimism dropped for the fifth straight month in January, according to closely-watched survey data by the right-leaning National Federation of Independent Business.

Why it matters: In lieu of economic data delayed by the shutdown, economists are paying closer attention to sentiment surveys which have increasingly been pointing to serious concerns about what's ahead for the economy.

While the overall small business optimism index has dropped off since the 2016 election, it still remains within range of historic highs.

  • Yes, but: "Half of the weakness came from softer expectations for real sales growth and business conditions in the second half of the year," the organization said in a press release.
  • Expectations for the economy to improve dropped by 10 points, while expectations for real sales to increase fell by 7 points and plans to increase employment declined 4 points.

Details:

  • Only 20% of small business owners said the next 3 months would be a good time for business expansion. That number has been declining since August's read of 34%. Those who said it wasn't a good time to expand business cited economic conditions, while those who were uncertain about expansion plans blamed the "political climate."
  • Not as many businesses are planning long-term projects and spending. The number of owners who planned capital expenditures within the next few months remained essentially flat at 26%, after falling 4 points in December.
  • Fewer owners are expecting higher sales in the next 3 months. The number has fallen consecutively since September, but remains above pre-election levels.

Still, the percentage of owners who reported paying workers higher wages is just one point below the record high seen in September.

  • Firms are hiring, though the number of business owners said finding quality workers was their "single most important business problem" remains near a record high.
  • Respondents also said borrowing conditions remained easy.

The big picture: The NFIB survey follows the weakest University of Michigan consumer sentiment index in more than 2 years. Last month's Conference Board Consumer Confidence Index showed consumers' future expectations for the economy had the largest 3-month decline in 7 years.

Go deeper: America's economic data divergence isn't going away

Go deeper

Survey: Top executives are pessimistic about the 2020 economy

Source: Deloitte; Note: Survey reflects CFO expectations for year-over-year increases in business spending and hiring; Chart: Axios Visuals

Chief financial officers are bracing for an economic slowdown this year, according to Deloitte's quarterly survey of nearly 150 executives at top North American companies.

Why it matters: Multiple surveys showed plunging optimism among top executives last year, thanks largely to trade war uncertainty. Deloitte's survey is a signal that skittishness continues to curb companies' hiring and spending plans this year, which could further hurt economic growth.

DetailsArrowJan 9, 2020

Report: Harvard business leaders pessimistic about the U.S. competing globally and improving workers' living standards

From Harvard Business School's report, "A Recovery Squandered: The State of U.S. Competitiveness 2019"

A key group of decision-makers has doubts about the United States' ability to compete globally while raising living standards for workers, according to Harvard Business School's new alumni survey on U.S. competitiveness.

Why it matters: The results reflect concerns that the economy's record-long expansion has not been spread broadly among all Americans — a sentiment with implications for the 2020 election.

Go deeperArrowDec 18, 2019

Unemployment fell to 50-year low in 2019 but wages stagnated

Data: U.S. Bureau of Labor Statistics; Chart: Axios Visuals

Friday's jobs report missed expectations, but still delivered solid numbers, showing the U.S. economy added well over 100,000 jobs and the unemployment rate remained near a 50-year low.

The big picture: BLS reported that the number of people who were employed part time but would rather be full-time employees declined by 507,000 over the year.