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Small business optimism levels at historic low, uncertainty rises

Small business optimism levels inched up in December, but due primarily to political uncertainty, remains at historically low levels. The NFIB explains.

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Small business optimism high as political uncertainty skyrockets

Dunkelberg said that 70.0 percent of owners characterize the current conditions as a bad time to expand, with one in four citing political uncertainty as the top reason. “This ‘uncertainty’ is likely to be a headline player for at least the first half of 2013. As the year progresses, those looking for some meaningful progress on the deficit are likely to be disappointed.”

“Spending will not be cut in any substantial way,” Dunkelberg predicted. “Many new “taxes” will be imposed. The Federal Reserve will keep financing the deficit, continually expanding its portfolio. Eventually the Federal Reserve will be able to declare victory (unemployment rate at 6.5%) even if its policies are benign or even mildly counterproductive. The private economy will take care of that in spite of all the impediments government puts in its way. But it could be so much better with some intelligent management.”

It’s not all doom and gloom, however, as Dunkelberg says housing will recover, driven by demographic necessity and weather. Additionally, he notes energy will continue to generate jobs and car sales will have a solid year.

Dunkelberg says economic policy will be restrictive, overall. “There is no way we can avoid “going over the cliff” in some form or another. Spending must slow and taxes will rise. New income tax rates are now set, but there are many more “hidden” taxes. There will be reductions in spending somewhere, and that’s a reduction in incomes for some workers and firms. Whatever the resolution of the “cliff”, it will not provide a stimulus unless it somehow turns out to be a very sensible bargain which makes consumers and owners more optimistic about the future. Health care costs are rising as well. Minimum wages are rising, impeding job creation. Our trading partners are weaker, reducing export demand. Consumers still have a debt hangover from the party. All this “sludge” on the road will reduce the speed of economic growth.”

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Video: NFIB explains the small business optimism levels

Small Business Optimism Index: December 2012

Written By

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

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