Nearly Half of US small businesses think economy got worse | Hacker News Reader

Nearly Half of US small businesses think economy got worse

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13 pointsstartuprules28 comments

More than half of US small businesses think the economy is better off or about the same.

Your statement is correct but the sentiment of the headline is correct in portraying that there is a problem in the US economy.

According to government statistics released yesterday the economy has been growing now for a full year -- why do nearly half of small businesses think the economy is worse today a year past the end of the Great Recession than it was a year ago?

Here is more evidence that this recession is different than any other post WWII recession:

http://research.stlouisfed.com/fred2/graph/?s%5B1%5D%5Bid%5D...

Assuming the Gov't statistics are accurate, and nothing in the article or survey indicates otherwise, you're asking why nearly half of small business owners believe the economy is worse?

There could be any number of reasons:

- Because nearly half of small business owners are stupid - Because nearly half of small business owners are doing worse - Because nearly half of small business owners lack enough knowledge to accurately assess the state of the economy - Because nearly half of small business owners watch too much -insert cable news channel here- - etc.

All of these things are perceptions. If the statistics indicate positive growth, it is up to the individual to learn the facts regarding the economy and adjust their perception accordingly.

My statement was correct and the sentiment of the headline was incorrect in portraying that there is a problem in the US economy compared to 1 year ago. The headline was correct in portraying the perception of nearly half of small business owners, and therefore misleading by failing to portray the majority of small business owners who do not hold the misperception that the economy is worse.

Sentiment plays a huge part of any economy. Whether or not it's true, the overall sentiment is that Obama is bad for business. This leads businesses to hoard cash, not hire, and in general prepare for the worst. The only thing businesses, the market and the economy in general hate more than bad news is unknowns.

Whether or not it's true, the overall sentiment is that Obama is bad for business.

That article didn't mention President Obama once. Would you care to cite a reference to back up your sentiment claim? After all, it was republicans who recently blocked a bill to aid small businesses with expanded loan programs, and tax breaks. http://dealbook.blogs.nytimes.com/2010/07/30/republicans-blo...

That article sounds like politics in general is bad for business with which I agree. I think government works best when it's basically staying out of the way and keeping the rule of law intact.

Obama is the President so it's easier to say him rather than the current government in general. As it stands there are many uncertainties around new regulations and costs (healthcare, taxes, potential cap and trade). I'm not saying I agree or disagree with any of them, but business hates uncertainty. It's hard to play the game if the rules are constantly changing.

Here is more detail of the study in the original article

http://www.huffingtonpost.com/2010/07/13/small-business-conf...

"Owners do not trust the economic policies in place or proposed and are distressed by global and national developments that make the future more uncertain," the NFIB said.

...

"Nine out of ten small businesses reported that all of their credit needs were met last month, according to the NFIB report. Just six percent of owners said 'finance' was their single most important problem. Rather, poor sales, taxes and government red tape took the top three spots."

That article sounds like politics in general is bad for business with which I agree.

That original article didn't mention politics at all, either. It seems like you're the one reading that into it. The huffingtonpost.com link does mention economic policies, and uncertainty, but that's to be expected, as, I agree with you, people do begin to look for someone in charge to blame. The reality, however, is that we were losing 750,000 jobs a month before Obama was even sworn in. The problem is that we didn't hit bottom with a complete financial system collapse and a full blown depression. Then Obama could not be blamed, because the only way to go would be up. As it stands, however, we averted that level of crisis and pain, yet many people don't realize the severity of the hit to our economy, and how long it will take to fix it -- no matter who is in charge.

Generally, for better or worse, the current sitting President is generally praised / blamed for all matters economic.

It's surprising that the guy who heads the organization that owns the banks, regulates the banks, prints the money, and appoints the guy who sets the prime rate would be held to account for economic matters involving primarily those organizations.

Central banks do not control the entire economy. There is much more involved, and economics is so complex that even experts vigorously disagree much of the time. Presidents themselves do not usually possess a high degree of economic insight and understanding. This is why all types of presidents from different parties have presided over recessions, depressions, and bursting bubbles. This leads some, like Ron Paul, notably, to suggest the fundamental system is flawed, and therefore suggests tinkering will never fix it, so the Federal Reserve should be abolished. I'm not saying I think he has the right strategy, but I do think he is correct in his reasoning for why we often experience economic angst.

> That article sounds like politics in general is bad for business with which I agree. I think government works best when it's basically staying out of the way and keeping the rule of law intact.

"No man's life, liberty or property are safe while the legislature is in session." By Judge Gideon J. Tucker

I don't think it's President Obama specifically. The deadliest threat to a business based economy is uncertainty. The past three years have been awash with just that, and the past year it seems to be getting worse. People respond to uncertainty by hoarding.

Specifically, the Federal Government seems to be thrashing about with no clear message, no clear vision, and no clear plan. Lots of proposed, complex proposed new laws make things worse, not better. Spending bills to help businesses that are elaborate or have elaborate requirements, with unclear goals are an example.

I agree the Federal gov't is all 5 year plans and new deals wrapped in golden chains.

The current administration didn't do themselves any favors by picking such large legislation, letting congress do most of the writing, and not clearly communicating how these large programs would bring down unemployment and reduce the overall cost of owning a business. The whole handling of GM / Chrysler doesn't inspire confidence. People need to calm in a crisis, but it seems people from both sides of the isle are more interested in soundbites and demonizing groups of people.

Big movements don't make people feel easy about stability.

Nearly half of US small business owners are Republican.

And the other half? Certainly not Democrats, none of them.

The basic fallacy is that individuals' yearly income is large is directly reflective of whether or not the US economy is in good shape, especially business owner's yearly income.

Sometimes it is, and sometimes it isn't. Especially with large corporations in the US, when owners take huge cuts for their personal income/ bonuses/ etc that means that less money gets invested into capital; overall, this is a bad thing for the economy AS A WHOLE. So, actually, if we siphon more from the top owners/ earners and force them to reinvest into capital (human and otherwise), we might actually have a better economy.

(ducking from the HN libertarians...)

Who do you think is more likely to spend money in a way that not only transfers but creates more wealth. The government or a business owner?

As an aside, what do you think top owners/earners do with their money? Hint, they are not stuffing it in their mattresses.

Historically, times of extremely high income inequality have not exactly been good ones.

Right. Those times of inequality led to extreme actions, like raising high margin tax rates to 90+%, like we did all throughout the Boom of the late 40s through to the 60s.

Those unusually progressive tax rates correlated to the largest economic boom in our country's history, bigger than the roaring 20s and definitely more evenly distributed. I wonder why we were so scared of socialism then when it was right at our doorstep in the form of a nearly 30-year long virtual command economy.

http://en.wikipedia.org/wiki/Great_Leap_Forward

http://en.wikipedia.org/wiki/The_Killing_Fields

http://en.wikipedia.org/wiki/Great_Purge

http://en.wikipedia.org/wiki/Kim_Jong-il

Thats why we were so scared of socialism when it was right at our doorstep.

Oh, please. We've had extinction-level policies before, right here in our own country:

http://en.wikipedia.org/wiki/Trail_of_Tears

Some put native American genocide as on-par with the Holocaust in terms of lives taken. So, perhaps it wasn't the political policies we were afraid of, or in fact any policies in general. It was likely the Cold War.

There's a huge, special one-time discontinuity that correlates with that period: much of the world's industrial capacity being destroyed, damaged or worn out from WWII. (I suppose the initial English first in the world industrialization period might be comparable).

For that matter, it's sobering to look up the statistic of when world trade returned to pre-WWI levels. I can't remember it now, but it's much later than you'd expect.

To be honest, I trust a democratically run government orders of magnitude more than I trust business owners.

I think top owners/ earners often buy luxury goods, invest overseas, buy land (switching ownership of land does nothing to increase capital), and otherwise aggrandize themselves rather than the community/ nation. I think this is especially true when said capitalists invest in enterprises with which they have no personal stake -- e.g., buying Ford stock because it has X rate of return and Y risk, not because they actually want to make cars.

One note -- socialist like myself hold the highest criteria to be the good of the collectivity, not an individuals' benefit. On this point I can't really argue, except to say it is my belief -- maybe merely because I don't come from a family of successful capitalists.

The OP said business owners and top earners. Wikipedia says that in 2006 the median income in the US was $32,140. I'm going to guess that most here on HN are making more than that (and some probably much much more). It's easier to look up towards the people making millions of dollars and miss that statistically you could also be considered one of those top earners. Are you ready to give up huge portions of your income to the government and let them decide how to spend it?

I think the recent hoopla over the financial reform bill and how it shut out small investors from investing in a startup shows how disconnected the policy makers are with reality. Are those the people you want making decisions on the next startup to fund? Even though they revised the bill, they kept the net-worth requirement of $1M excluding ones primary residence.

http://www.angelcapitalassociation.org/resources/public-poli...

> To be honest, I trust a democratically run government orders of magnitude more than I trust business owners.

There is a direct line between government interference in business and our current recession/depression. One can argue about the color of the drapes, but the trillions of malinvestment came straight from the Fed, Fannie, and Freddie. To blame the bankers for taking advantage of bad policy is like throwing a wad of cash into a crowd and expecting them not to pocket the money.

Who builds those luxury goods? Do some searching on the luxury taxes ( http://www.time.com/time/magazine/article/0,9171,973305,00.h... , http://www.nytimes.com/1991/07/21/nyregion/new-luxury-tax-tr... ) and find out how normal people make money off people who are rich.

What is the point of having a "good" economy that does not produce income for those risking their capital?

The basic fallacy is that the measures we use for the economy are rigged so that the facilities the gov't has at it's disposal for fixing the economy (printing money) appear to work.

What keeps the economy afloat is not the investment of capital (supply side) but the consumer purchases (demand side). Would you advocate investment of capital in areas where a market will not exist?

Also, in regards to siphoning wealth and "reinvesting" it, you may want to look at the PHIGS countries which have done just that.

Can anyone tell me that in a country like America where most people drive to work that a CPI that does not include the price of gas is accurate? Most things in the CPI are subject to massive gov't subsidies that effectively control the majority of movement in the CPI.

If the point of the economy is to maximize economic results as a whole then I can't think of a better measure of the economy than individual incomes adjusted for a real rate of inflation. It's far better than stock market / CPI proxies.

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