“Measures of consumer optimism are also weak, offering no hope of significant gains in spending as the savings rate increases. There is no exuberance to be found, a flatness in optimism pervades the economy, consistent with the plodding growth characterizing this recovery.
There is no leadership in Washington, no articulation of a path to a better future, no evidence that policy-making is coordinated or focused on promoting growth or job creation. Important government institutions are mired in scandal and inaction, voters have lost confidence (20 percent of consumers think government policy is “good”, 41 percent think it is “poor”). The prospects that strong, unifying leadership will emerge after the election appear to be poor.”
That statement above really doesn’t give you a warm and fuzzy feeling towards the economy, does it? In spite of the weak commentary, today’s release of the monthly NFIB Small Business Optimism Index actually saw a slight bounce from last month. After making its largest peak to trough decline of the recovery, the index rose from 92.6 up to 93.6 in April, which was 0.6 above expectations. Even after this month’s bounce, the index remains well below its long-term average of 96.0 going back to 2000.
Within this month’s report, the two biggest problems facing small business owners are the twin threats of Taxes and Government Red Tape, which were cited by 21% and 20% of respondents, respectively. Next on the list this month was Quality of Labor (12%), which moved into third place due to fewer business owners citing Poor Sales (11%) as their number one problem. In terms of labor issues, 46% of respondents reported that there were few or no qualified applicants available for the positions they were looking to fill. With fewer qualified applicants, business owners may find the need to ‘pay up’ for job candidates, and we saw some signs of this as 6% of business owners cited labor costs as their number one problem (up from 5% last month). Finally, in this month’s Bespoke Consumer Pulse report, we saw a meaningful uptick in overall healthcare costs, including insurance premiums. That increase in insurance costs was also evident in this month’s NFIB survey where the percentage of respondents citing “cost of insurance” increased from 8% to 10%.