A nice find by Calculated Risk on the NIFB Small Business report. Long time readers of FMMF will be struck by some of the quotes from the group; they could literally have been ripped from the virtual pages of my website 2-3 years ago. [Apr 14, 2008: Stuff I've been Negative on Since Fall 2007] Written 2 years ago...
The subprime nation (us) is in trouble. Consumers make 70% of GDP. It's a consumption culture where the consumer is being drowned in negative wealth effect from housing, inflation from the Federal Reserve/global forces, and underemployment if not outright unemployment. It is bad out there in the bottom 60% and it's creeping up to the formerly immune 20-40 percentile as well. So now it "matters" because that starts cutting into the bottom part of CNBC's audience. It is the perfect storm and I will utter the most dangerous words a financial commentator can ever utter - it *IS* different this time. Or at least it's certainly not like it's been in a long time...
People were asking me for individual names for shorts - I continue to stress the same themes I've stated since last summer - anything consumer related or based on American conspicuous consumption - it will all go.
Sorry to sound alarmist but this is the coming reality of a strapped, indebted US consumer whose real wages have been pummeled for years (this has not suddenly happened 18 months ago; it's just now catching up to us without the house ATM to hide the pain), and now is taking it on the chin with the Fed policy to devalue their currency to the tune of 1:5 ratio. Each dollar they now own becomes even more worthless.
We're heading into a long, drawn out recession... I've said it since last summer and as each month/week/quarter passes more denial will turn into acceptance and more earning cuts will have to happen across the board. The people in denial rely on government reports, which are for the most part another pile of fiction work.
- The outlook of small business owners remained bleak at the start of the new year, according to a survey released on Tuesday by the National Federation of Independent Business. "Small business owners entered 2010 the same way they left 2009 -- depressed," the group said, noting its Small Business Optimism Index reading for January was still below the 90 mark, the dividing line between positive and negative outlooks. The quarterly Index readings have been below 90 for 7 quarters, indicative of the severity and pervasiveness of this recession.
- In January, small businesses had to cut prices despite tangling with inflation while profits remained weak, according to the survey of the federation's 2,114 members.
- Swelling inventories have largely contributed to the recent growth in U.S. gross domestic product. But small business owners said they continue to liquidate inventories and, with weak sales trends, have little incentive to replenish their stocks. There are "still more owners planning to reduce stocks than planning new orders," the group found.
So the above shows us the difference between the big, multinational corporation (that has customers overseas - especially beneficial if exposure to Asia is high) and the typical small business, which is going to be facing the domestic consumer.
Now for the killer quote - I believe this one could have been lifted directly out of the blog...
- "Too many houses were built, too many strip malls opened, too many restaurants started, too many new retail outlets were launched in the 2003-07 period and all of them cannot be supported by a consumer that now chooses to save," the group said.
- Last week, President Barack Obama announced new assistance to small businesses, including a lending program through the Small Business Administration. But the NFIB said the new aid is misdirected, as "only 5% of small business owners cite 'financing' as their top business problem but 31% cite 'poor sales."
- "Loans are not in short supply," it said, "but reasons to get loans certainly are."
- "The biggest problem continues to be a shortage of customers."
Let that sink in. Five percent say financing is their main issue versus a third who say it's poor end demand. Ignore the dogma -- "if only the banks would lend, we'd be fine!" -- this is the reality.