TUESDAY APRIL 13, 2010

Lackof Small Business Confidence

This morning, a survey of small businesses showed that owners confidence was at an 8 month low.  It is interesting to see small business with low confidence while earning growth estimates for the S&P 500 are forecasting a 40% jump.  Why the difference?

The large, multinational companies are just that...multinational.  As such, large businesses are less reliant on the U.S. economy for their success.  Small business tends to be almost entirely based on the domestic economy.  So, while the multinationals are benefiting from strong international growth, particularly in Asia, small businesses are left feeling less than enthusiastic about their prospects in the States.  The small businesses job machine is still faced with great uncertainty.  The economy seems to be on the mend, but by no means is it a vigorous recovery.  The threats of higher taxes on multiple fronts (income, capital gains, VAT, property) is scary and the promise of lower heathcare costs appears to be wishful thinking.  Already, Members of Congress are shocked, shocked that the recently past healthcare bill is not preventing premiums from rising.   Small businessmen are probably not so surprised, and that is likely contributing to their lack of confidence.

In short, Washington needs to articulate a more robust growth oriented economic policy.  Until it does, small businesses are likely to remain glum.  And if small business remains glum, unemployment is likely to remain high. 

POSTED AT 1899-12-30 14:51:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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