"The news on the jobs front in February was good across the board. According to the establishment survey, payrolls increased by 227,000 in February, with private sector payrolls up 233,000. That's the third straight month where payroll gains exceeded 200,000.
"The household survey, which better captures small business activity, showed employment gains of 428,000, with the labor force also increasing by 476,000. The data show solid gains for two straight months now.
"These employment gains have come in spite of fiscal and monetary policymaking that has kept uncertainty alive. Serious risks remain, including energy prices and misguided energy policies, new taxes and regulations associated with ObamaCare phasing in, European woes, looming tax increases, new regulatory threats and monetary policy risks. The path of these trends and policies all need to change to get the U.S. economy firmly on a path of solid economic growth. We need pro-entrepreneur, pro-growth tax and regulatory relief, an aggressive free trade agenda, and sound monetary policy focused on price stability."
Showing posts with label 2012 economy. Show all posts
Showing posts with label 2012 economy. Show all posts
Friday, March 09, 2012
SBE Council Chief Economist on Latest Jobs Data
Today, Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council (SBE Council), released the following statement in response to the February employment data reported by the U.S. Bureau of Labor Statistics:
Wednesday, February 29, 2012
Consumer Confidence: Up ... But Big Questions Continue
On February 28, the Conference Board reported that its Consumer Confidence Index, which had declined in January, increased in February from 61.5 a month earlier to 70.8.
Consumers were more optimistic on their assessments of both current conditions and their short-term outlook. That's certainly welcome. But all of this needs to be put in perspective.
For example, before the deep recession and poor recovery took over, the Consumer Confidence Index was far higher. Five years ago, in February 2007, it came in at 111.2. Over the three years prior to the most recent recession, the index range ran between 85.2 and 111.9. For good measure, over the past three-and-a-half decades, the high was 144.7 in January 2000.
So, while consumer confidence is improved compared to where it's been over the past year - falling short of the 72.0 mark hit last February, which was the high mark for the past four years - we're still nowhere near where we should be, especially more than two-and-a-half years into a recovery.
In addition, while improved, consumers remain far from optimistic in terms of their outlooks for both business conditions and the labor market.
On business conditions, the Conference Board reported: "The proportion of consumers expecting business conditions to improve over the next six months increased to 18.7 percent from 16.7 percent, while those anticipating business conditions will worsen decreased to 11.8 percent from 14.6 percent." And on labor markets: "Those anticipating more jobs in the months ahead increased to 18.7 percent from 16.4 percent, while those anticipating fewer jobs declined to 16.9 percent from 19.1 percent.
Again, while any positive moves are appreciated, these levels hardly reflect a robust confidence in the economy. Indeed, it's quite the contrary.
Finally, it must be noted that this measure of consumer confidence might already be outdated. The cutoff date for these results was February 15. With the recent rise on gas prices, and expectations for rising costs at the pump in coming weeks and heading into the summer, especially with uncertainty swirling around Iran, it would not be surprising to see consumer confidence take a hit as a result.
In the end, of course, consumer confidence reflects the state of the economy and job creation, along with key costs like energy. Consumer uncertainty, along with business and investor uncertainty, need to be reduced via sound public policies, which mean a shift to smaller government, namely, substantive, permanent tax and regulatory relief, reduced federal spending, sound monetary policy focused on price stability, and stronger leadership on free trade in the global arena. That shift would be good for entrepreneurship, business, investment, growth, jobs and therefore, consumer confidence.
_______
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
Consumers were more optimistic on their assessments of both current conditions and their short-term outlook. That's certainly welcome. But all of this needs to be put in perspective.
For example, before the deep recession and poor recovery took over, the Consumer Confidence Index was far higher. Five years ago, in February 2007, it came in at 111.2. Over the three years prior to the most recent recession, the index range ran between 85.2 and 111.9. For good measure, over the past three-and-a-half decades, the high was 144.7 in January 2000.
So, while consumer confidence is improved compared to where it's been over the past year - falling short of the 72.0 mark hit last February, which was the high mark for the past four years - we're still nowhere near where we should be, especially more than two-and-a-half years into a recovery.
In addition, while improved, consumers remain far from optimistic in terms of their outlooks for both business conditions and the labor market.
On business conditions, the Conference Board reported: "The proportion of consumers expecting business conditions to improve over the next six months increased to 18.7 percent from 16.7 percent, while those anticipating business conditions will worsen decreased to 11.8 percent from 14.6 percent." And on labor markets: "Those anticipating more jobs in the months ahead increased to 18.7 percent from 16.4 percent, while those anticipating fewer jobs declined to 16.9 percent from 19.1 percent.
Again, while any positive moves are appreciated, these levels hardly reflect a robust confidence in the economy. Indeed, it's quite the contrary.
Finally, it must be noted that this measure of consumer confidence might already be outdated. The cutoff date for these results was February 15. With the recent rise on gas prices, and expectations for rising costs at the pump in coming weeks and heading into the summer, especially with uncertainty swirling around Iran, it would not be surprising to see consumer confidence take a hit as a result.
In the end, of course, consumer confidence reflects the state of the economy and job creation, along with key costs like energy. Consumer uncertainty, along with business and investor uncertainty, need to be reduced via sound public policies, which mean a shift to smaller government, namely, substantive, permanent tax and regulatory relief, reduced federal spending, sound monetary policy focused on price stability, and stronger leadership on free trade in the global arena. That shift would be good for entrepreneurship, business, investment, growth, jobs and therefore, consumer confidence.
_______
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
Friday, February 10, 2012
Keating Talks Economy and Small Business
SBE Council chief economist Ray Keating was a guest on Jim Blasingame's Small Business Advocate syndicated radio show on February 9.
Keating and Blasingame discussed some of the latest economic numbers, and the impact of federal policies on small business and the economy.
Listen to the most recent show, along with previous guest spots with Ray here.
Tuesday, January 10, 2012
2012 Outlook for Small Business and the Economy
American entrepreneurs, investors, businesses and workers are a hearty, resilient bunch. Despite government derailing the economy, and keeping it derailed for more than four years now, the private sector nonetheless continues to push ahead.
Assorted political supporters of and media apologists for big government activism have asserted that government has saved the private market from corruption and excess, not to mention unexplainable and/or unexpected shocks. If not for government action, they assert, the entire economy would have gone off a cliff. This is the same spin served up for more than three-quarters of a century regarding the Great Depression, so why not replay the fiction now?
In reality, of course, the economy of the 1930s plummeted off a cliff to great depths, and over the past four years, we fell into a deep recession followed by a grossly under-performing recovery. These were not cases of the private market failure, nor unforeseen shocks. Instead, these were unmistakable instances where misguided government policies caused great harm.
During the Great Depression, protectionism, high taxes, large increases in government spending, and unprecedented regulation wreaked havoc on private investment and business. In similar fashion in recent years, government subsidies, bailouts, so-called stimulus spending, regulatory activism, misguided monetary policy, and higher taxes, along with the threat of further tax increases, have raised costs and created uncertainties that have done real and considerable economic damage.
And even when considering the recent and potential effects of troubles in Europe, it must be recognized that Europe suffers from slow growth (and looming recession) and debt woes specifically because of government sucking up more than half of GDP, with commensurate and burdensome tax and regulatory structures.
Given the direction of public policy, it's a salute to entrepreneurs, businesses and investors that things have not been far worse over the last few years.
Keeping all of this in mind, as we look ahead, the key question is: Will policymaking change so as to unleash the private sector in 2012?
Given the political breakdown between the White House, Senate and House of Representatives, it's hard to visualize any significant changes for the positive.
Federal Spending. Some negatives could be avoided if, for example, spending is reined in during the current fiscal year. Unfortunately, though, federal outlays not only climbed to new heights in FY2011 - after unprecedented growth during FY2008 and FY2009, and a small, one-year breather in FY2010 - but are expected to increase once more in FY2012.
Tax Uncertainty. Will various temporary tax measures affecting entrepreneurs and businesses be extended for at least 2012? Unfortunately, tax uncertainty will continue to weigh on small business confidence and their general outlook in 2012.
In 2011, for example, Section 179 expensing allowed businesses to write off up to $500,000 in capital expenditures, including on new and used equipment, and new software, beginning to phase out dollar-for-dollar when total capital spending exceeds $2 million. In addition, though, for 2011, a 100% bonus depreciation applied to capital expenditures above $500,000 on new equipment, including for businesses spending in excess of $2 million. Unless changed, under current law for 2012, the Section 179 expensing level is scheduled to fall back to $125,000 (subsequently retreating to $25,000 for 2013), and bonus depreciation declines to 50%.
For good measure, at the end of this year, increases in personal income, capital gains and dividends tax rates are scheduled to take effect. At the very least, the President has called for increased tax rates on upper incomes, which would mean reduced incentives and resources for entrepreneurship, investment and job creation.
Regulatory Activism Will Abound. The Obama administration shows no inclination for reining in its regulatory activism. Just consider the President's pro-regulation recess appointments to kick off 2012 to the National Labor Relations Board and the Consumer Financial Protection Bureau. As a report from TheHill.com titled "President Obama starts new year with sweet pitch to his liberal base" makes clear, these were appointments meant to score political points, rather than decisions based on what makes sense for economic growth and job creation.
Given these actions and the President's campaign rhetoric, Mr. Obama seems intent on pushing a populist, liberal, class-warfare, anti-business agenda heading into the November election in the hopes that his liberal base will be energized.
These and other uncertainties and potential cost increases will continue to dampen entrepreneurial and business activity.
Considering this entire scenario, it's very difficult to envision the U.S. economy getting back to real annual GDP growth of better than 4 percent, which is where growth should be during recovery/expansion years. To the contrary, while the economy should continue to expand in 2012 due to those resilient private sector players, real growth promises to continue to be uneven and under-performing. Likewise, employment growth will continue to come up short compared to where it should be at this point in a recovery, with consumer confidence similarly restrained.
One factor that could change the outlook for 2012 is if business owners and investors see a pro-growth political majority emerging as the November elections approach. In that case, given that markets are forward-looking, growth could begin to pick up during 2012.
_______
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
Assorted political supporters of and media apologists for big government activism have asserted that government has saved the private market from corruption and excess, not to mention unexplainable and/or unexpected shocks. If not for government action, they assert, the entire economy would have gone off a cliff. This is the same spin served up for more than three-quarters of a century regarding the Great Depression, so why not replay the fiction now?
In reality, of course, the economy of the 1930s plummeted off a cliff to great depths, and over the past four years, we fell into a deep recession followed by a grossly under-performing recovery. These were not cases of the private market failure, nor unforeseen shocks. Instead, these were unmistakable instances where misguided government policies caused great harm.
During the Great Depression, protectionism, high taxes, large increases in government spending, and unprecedented regulation wreaked havoc on private investment and business. In similar fashion in recent years, government subsidies, bailouts, so-called stimulus spending, regulatory activism, misguided monetary policy, and higher taxes, along with the threat of further tax increases, have raised costs and created uncertainties that have done real and considerable economic damage.
And even when considering the recent and potential effects of troubles in Europe, it must be recognized that Europe suffers from slow growth (and looming recession) and debt woes specifically because of government sucking up more than half of GDP, with commensurate and burdensome tax and regulatory structures.
Given the direction of public policy, it's a salute to entrepreneurs, businesses and investors that things have not been far worse over the last few years.
Keeping all of this in mind, as we look ahead, the key question is: Will policymaking change so as to unleash the private sector in 2012?
Given the political breakdown between the White House, Senate and House of Representatives, it's hard to visualize any significant changes for the positive.
Federal Spending. Some negatives could be avoided if, for example, spending is reined in during the current fiscal year. Unfortunately, though, federal outlays not only climbed to new heights in FY2011 - after unprecedented growth during FY2008 and FY2009, and a small, one-year breather in FY2010 - but are expected to increase once more in FY2012.
Tax Uncertainty. Will various temporary tax measures affecting entrepreneurs and businesses be extended for at least 2012? Unfortunately, tax uncertainty will continue to weigh on small business confidence and their general outlook in 2012.
In 2011, for example, Section 179 expensing allowed businesses to write off up to $500,000 in capital expenditures, including on new and used equipment, and new software, beginning to phase out dollar-for-dollar when total capital spending exceeds $2 million. In addition, though, for 2011, a 100% bonus depreciation applied to capital expenditures above $500,000 on new equipment, including for businesses spending in excess of $2 million. Unless changed, under current law for 2012, the Section 179 expensing level is scheduled to fall back to $125,000 (subsequently retreating to $25,000 for 2013), and bonus depreciation declines to 50%.
For good measure, at the end of this year, increases in personal income, capital gains and dividends tax rates are scheduled to take effect. At the very least, the President has called for increased tax rates on upper incomes, which would mean reduced incentives and resources for entrepreneurship, investment and job creation.
Regulatory Activism Will Abound. The Obama administration shows no inclination for reining in its regulatory activism. Just consider the President's pro-regulation recess appointments to kick off 2012 to the National Labor Relations Board and the Consumer Financial Protection Bureau. As a report from TheHill.com titled "President Obama starts new year with sweet pitch to his liberal base" makes clear, these were appointments meant to score political points, rather than decisions based on what makes sense for economic growth and job creation.
Given these actions and the President's campaign rhetoric, Mr. Obama seems intent on pushing a populist, liberal, class-warfare, anti-business agenda heading into the November election in the hopes that his liberal base will be energized.
These and other uncertainties and potential cost increases will continue to dampen entrepreneurial and business activity.
Considering this entire scenario, it's very difficult to envision the U.S. economy getting back to real annual GDP growth of better than 4 percent, which is where growth should be during recovery/expansion years. To the contrary, while the economy should continue to expand in 2012 due to those resilient private sector players, real growth promises to continue to be uneven and under-performing. Likewise, employment growth will continue to come up short compared to where it should be at this point in a recovery, with consumer confidence similarly restrained.
One factor that could change the outlook for 2012 is if business owners and investors see a pro-growth political majority emerging as the November elections approach. In that case, given that markets are forward-looking, growth could begin to pick up during 2012.
_______
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
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