Tuesday, April 13, 2010
NFIB April (March Survey)
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.
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.
MoM, would you care to explain for us how those reports are cooked, half-baked, or just inedible to start with?
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.
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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