Small businesses saw a slight improvement in the economy in November, according to just-released survey results from The Small Business Authority. But whether that confidence in growth continues remains to be seen, said Barry Sloane, president and CEO of Newtek Business Services.
The SB Authority Index is up .31 percent from October 2011. Sloane says the increase can be attributed to consumer spending around Black Friday. “The largest, most important sector of the economy is consumer spending,” he said. “Same-store sales in November rose 5.8 percent. This is the first time we have seen such an increase in many months.”
The index uses monthly ADP national employment numbers, retail sales, SBA loan originations, among other factors, to gauge small business sentiment.
Sloane told CNBC.com that the Black Friday holiday spending push was a big factor in the increase in retail sales. However, he does not expect December to show as great an increase. “Our preliminary information shows that while December was good, it’s not as good as it was in November.” In addition, “a lot of that spending was going on charge cards. We’re not seeing a growth in income, or jobs, so when those bills are due in January and February, spending will go down.”
Looking ahead, Sloane said, there are three factors contributing to small business owners’ tempered enthusiasm for improved economic conditions. “Increasing tax rates, the uncertainty of ObamaCare, and more government regulation are keeping independent business owners from an optimistic outlook heading into 2012,” he said.
The situation is not bleak everywhere, said Sloane. “There are certain states that have turned themselves around: in Ohio and Wisconsin, governors there fixed budget deficits and cut spending. Those states have experienced employment growth.”
But when places such as California and Nevada, where there is high unemployment and foreclosure rates, dominate the news, said Sloane, “it puts a wet blanket on optimism.”
While last week’s payroll tax extension was a victory for small businesses, “it doesn’t create anything new,” Sloane noted. “The economies that are doing well are the ones investing in themselves,” such as North Dakota, where a booming oil industry is keeping unemployment low. But for small businesses to feel optimistic, he said, that job creation needs to happen on a national level.
“We still need job growth, we still need spending," he said. "It remains to be seen whether these success stories can happen on a federal level.”