A drop in the level of optimism among small business owners nationally represents a “cause for alarm” among such businesses in Massachusetts, according to the head of the state chapter of the National Federation of Independent Business.
“Small businesses in Massachusetts have been swimming upstream for years and now they’re in danger of being swept away by a declining national economy,” federation State Director Bill Vernon said in a statement accompanying new survey data.
The federation’s index of small business optimism fell in June, relinquishing gains achieved earlier in 2012, the organization reported Tuesday. The index, based on responses from 740 randomly sampled NFIB members, showed gains in only one of the 10 areas measured, with NFIB chief economist William Dunkelberg calling the results “a real economic downer.”
In May, Administration and Finance Secretary Jay Gonzalez, Gov. Deval Patrick’s budget chief, told local leaders visiting the State House that while the state economy is expanding, turmoil in Europe and uncertainty surrounding looming federal budget cuts present the greatest threat to state finances.
“I think the two biggest risks to our own economy are the federal government and what the federal government ends up doing with its own budget cuts, and the other is Europe. The economists say something like 40 percent of our state’s exports go to the European Union, so we are very tied disproportionately to other states to the European economy,” Gonzalez said.
Vernon, a former state representative and former chairman of the Massachusetts Republican Party, said the state’s economy is doing better than the national economy, but emphasized that many small businesses in Massachusetts are “struggling” and likened the economic conditions here to “choppy waters.”
At 6 percent in May, the Massachusetts jobless rate compares to an 8.2 percent national jobless rate in June. Statistics reflecting state job and unemployment shifts in June will be released July 19.
Vernon agreed that trouble in the European economy can act as a drag on the Massachusetts economy because businesses, including larger corporations, are tied to global economic conditions.
“Our state is more dependent on the international economy than other states generally,” Vernon told the News Service in an interview. “There’s a limitation on all states as to how far ahead of the national economy you can get. You can only go so far on your own.”
According to the business federation, much of the decline in June’s small business confidence index was tied to responses about labor market indicators and spending plans for capital equipment and inventories.
“The economy has definitely slowed,” Dunkelberg said in his statement. “Job growth will be far short of that needed to reduce the unemployment rate unless lots of unemployed leave the labor force – no consolation.
“Taxes remain a top concern for the small-business community. With the Supreme Court’s endorsement of the individual mandate as a tax in its health care decision, we will have to wait for July’s survey to realize the effect it will have on small business confidence.”
According to the report, small business job creation plans nationally look “even worse” in July than the “very weak” job creation in June “so there will be very little progress on the jobs front in the coming months.”
According to the report, 93 percent of small business owners reported all their credit needs were met or that they were not interested in borrowing. Also, 44 percent of small business owners had hired or tried to hire in the last three months and 33 percent reported few or no qualified applicants for positions.
“No inflation issue on Main Street and there is nothing the Federal Reserve can do to increase employment,” the report read. “Rates are as low as they have ever been and more reductions will not help, but the promise of more action by the Federal Reserve will keep Wall Street busy and appease Congress.”
Article source : http://www.metrowestdailynews.com/news/x1655030712/Small-business-leader-says-drop-in-confidence-nationally-worrisome-for-Mass
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