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Tuesday, April 13, 2010

NFIB April (March Survey)

Just awful. Unmitigated angst.

As expected, the employment contraction ended (we were about there last month). From here on out till about the end of 2010, small business employment losses should be concentrated in business closures.

Otherwise, this was jawdroppingly bad. One does not know what to say.

Page 14 shows a huge spike in short-term borrowing rates, but the basic problem is still poor sales. On page 17, the inventory satisfaction graph shows that these businesses aren't going to be making Wall Street very happy unless something changes dramatically.

The total index fell hard to register 86.8 in March. That's what it was in April of last year. In this cycle, the index peaked in January at 89.3. Sales expectations are at their low since last October. February and March outlooks for general business conditions were at their most negative since February and March of 2009, although improved from those levels.

State and local government cuts start to pick up now.
This will further hurt small and large businesses.
I would imagine sales tax revenue, adjusted for tax increases, will continue to show a contraction in the
velocity of money.
And the news is full of reports from the Fed about how things are improving. Or perhaps the Fed is full of reports about improving how things are reported.

MoM, would you care to explain for us how those reports are cooked, half-baked, or just inedible to start with?
I listened to the radio in my car today and CNN said everything was REALLY GOOD.hmmm,can I trust my eyes and actual data? or perhaps it is a matter of perspective,perhaps being paid 6 or 7 figures to be cheerful and upbeat helps you to BE cheerful and upbeat?
Yep things are going down and around the end of May every one that thought this was a U shape economy will be changing that thought pattern. This will get real ugly and then it won't improve any time soon, ws goal is to get what's left and they're coming for SS/Medcare next. They have no intention of leaving any money on the table for us little people. Just look around the news and it's all good, thing are rerturning to normal. This is the new normal in Amerika, Sad.
NJCommuter - I did look at retail today, and the car sales were really good. But most of it was pretty good - so good that I don't buy the explanation that the earlier Easter date caused it. Admittedly April will tell the tale. The ex-auto figure was +0.6% compared to February.

However my grocery store index shows bruising competition and further deflation.

I think the real story is that lower income levels are once again eroding slowly.

However we are in a statistical recovery that is real, as is shown by numerous reports. The freight reports are very reliable and show continued gains.

Can we sustain it? That's the question, and I think that question will only be answered by pricing levels, which will be a competition between the struggle for market share and the effect of pass-through fundamental costs.

There would appear to be a sharp contradiction between what is happening in the retail report and what is happening at groceries.

I think there are two explanations - the first is the retail report is undoubtedly affected by an overall retail contraction, so we are seeing some "extra" in this report because sales have been shifted to those left standing. The second is that the general worry level for consumers who have not been brutalized by this recession has ebbed, and so they are buying more to satisfy pent-up needs. Financial conservatives usually have cash laying around, and they have begun spending it on things they want. Spending appears concentrated not on frivolities, but small luxuries and major needs.

By my numbers the real angst started in later December - February, and is picking up steadily. It generally takes 6-18 months for this sort of thing to fully propagate through the economy, so we are looking at October 10 through July 11 as being the danger dates. If we can ride through that period without sustaining a further real contraction, we'll be in better shape later.

The interesting thing is that there is a lot of give-back at the grocery stores, so the first level of shock in fuel prices appears to have been cushioned. But I now wonder how the groceries can sustain what they are doing.
"but the basic problem is still poor sales."

Interesting report MOM, lack of sales volume is critical in modern day business as volume is suppose to make up for the lack of margin. Anyway this survey has been consistent in pointing at slow demand as the key component to new hiring and without saying so probably will be the leading reason that small business owners fold up in large numbers as they exhaust saving and credit resources in 2010.
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