NFIB Weekly NewsLeading the News Small Business Optimism Index Shows No Signs Of Recession (10/15/2019)
24/7 Wall Street (10/13, Ausick) reported on NFIB’s small business optimism index for September, noting that it “slipped from 103.1 in August to 101.8,” while showing “no sign of a recession.” NFIB President and CEO Juanita D. Duggan was quoted saying, “All indications are that owners are eager to do more, but they’re uncertain about what the future holds and can’t find workers to fill the jobs they have open,” while Chief Economist William Dunkelberg was quoted saying, “The persistence of unfilled job openings and reports of a deficiency of job applicants indicate that there is still substantial economic optimism about the economy on Main Street.”
Biryla: Corporate Transparency Act Onerous For Small Business, Unlikely To Be Effective Against Crime (10/15/2019)
NFIB New York state director Greg Biryla wrote in the Syracuse (NY) Post-Standard (10/8) that “it is highly questionable that” the Corporate Transparency Act “will do much to address global terrorism, trafficking or laundering operations, but it will certainly succeed in creating extensive and onerous new regulatory, reporting, and security burdens for hundreds of thousands of small business owners.” Biryla added that the measure “is a massive intrusion by government, and it would have a pronounced impact across Central New York. Nearly 80% of businesses in Central New York have fewer than 20 employees.”
September Small Business Optimism Falls, Yet Remains Historically High (10/08/2019)
NFIB’s Small Business Optimism Index for September took a slight dip, falling by 1.3 points to 101.8. Nonetheless, the index maintained a historically high level, falling within the top quintile of all historical data. The index reflected continued job creation, investment, and spending, while the Uncertainty Index reflected high levels of concern, though “the survey shows no sign of a recession.” NFIB President and CEO Juanita D. Duggan was quoted saying, “As small business owners continue to invest, expand, and try to hire, they’re doing so with less gusto than they did earlier in the year, thanks to the mixed signals they’re receiving from policymakers and politicians. ... All indications are that owners are eager to do more, but they’re uncertain about what the future holds and can’t find workers to fill the jobs they have open.”
NFIB President Calls On Congress To Make Small Business Tax Cuts Permanent (10/08/2019)
NFIB President and CEO Juanita Duggan wrote in Fox Business (10/2) that “the 2017 tax cuts are a big win for small business,” as the Tax Cuts and Jobs Act addressed small business owners’ concerns over federal business income taxes going back years. Duggan said most NFIB members that reported lower taxes invested the gains in their businesses, most commonly as pay raises for employees. However, a “growing concern” among members “is the future of the tax cuts,” most of which expire at the end of 2025. Duggan called on Congress to “make permanent its most important parts to small businesses, which means passing the bipartisan Main Street Tax Certainty Act.”
NFIB Quoted In Opinion Pieces (10/08/2019)
Former SBA Administration and The Latino Coalition chairman Hector Barreto wrote in Fox Business (10/5) that “while the stock market spikes and dips, small business...is steady and doing great. Small-business owners are feeling great about the future, too.” Barreto mentioned NFIB’s small business optimism index, saying it “has been at historically high levels since 2017.”
Consumer Spending Up 0.1% In August; Income Rose 0.4%, Savings Rose To 8.1% (10/01/2019)
The AP (9/27, Rugaber) reported the Commerce Department on Friday reported that US consumer spending rose “just 0.1% in August, the smallest gain in six months,” while “incomes rose at a solid pace” of “0.4%, up from a small gain in the previous month.” The AP added that “excluding the volatile food and energy categories, core prices ticked up 0.1%,” and “the savings rate rose to 8.1%, a sign that consumers have a healthy financial cushion and aren’t overspending.” Meanwhile, “the Fed’s preferred inflation gauge climbed just 1.4% in August compared with a year earlier, below its 2% target,” and it has “mostly been below that level since the target was adopted in 2012.”
Business Climate Trump Record Includes Near Double Historic Growth Rate In Corporate Profits (10/15/2019)
Bloomberg (10/12, Ponczek and Hajric) reported that since President Trump was elected, “annual S&P 500 profits have gone from $116 a share to an estimated $179.30 next year,” or “near twice the historical growth rate.” Overall, analysts estimated S&P profits would be $176.70 on the year, but estimates have now fallen to $162.90. Bloomberg suggested tariffs are responsible, but even with that result, “there’s no denying that corporate profits have surged” and quoted Edward Jones’ Nela Richardson saying, “If things were to persist, that’s a great legacy to stand on.”
Fed To Begin Short-Term Treasury Bill Buying Program (10/15/2019)
The AP (10/11, Rugaber) reported the Federal Reserve said last Friday that it will “buy short-term Treasury bills each month until the second quarter of 2020 to inject cash into the banking system and make it easier to control its benchmark lending rate.” The Wall Street Journal (10/11, Timiraos, Kiernan, Subscription Publication) reported the Fed will begin initial purchases of $60 billion in Treasurys over the month starting Tuesday. However, the New York Times (10/11, Smialek) reported Fed “is trying to convince the world that it is not a new round of” quantitative easing.
Fed Policymakers Expressed Concern Over Weakening Business Activity (10/15/2019)
The New York Times (10/9, Smialek) reported, “Several Federal Reserve policymakers, at their most recent meeting, voiced concern that weaker business activity and investment could lead to slower hiring and consumer spending,” according to minutes published Wednesday. They “expected the economy to continue growing steadily with the help of their rate cuts, the minutes showed,” but they were “increasingly worried about risks to that outlook from President Trump’s trade war, the threat of a chaotic British exit from the European Union and protests in Hong Kong.”
Reuters (10/10, Mutikani) reported that the Labor Department announced Thursday that “in the 12 months through September, the CPI increased 1.7% after advancing by the same margin in August.” Reuters said the announcement that consumer prices “were unchanged in September and underlying inflation retreated, support[ed] expectations the Federal Reserve will cut interest rates in October for the third time this year amid risks to the economy from trade tensions.” However, other data announced Thursday “showed an unexpected decline in the number of Americans filing claims for unemployment benefits last week,” which could “complicate matters for the Fed amid divisions among officials on the appropriate response to the rising headwinds to growth.”
Job Openings At Lowest Level Since March 2018 (10/15/2019)
Reuters (10/9, Mutikani) reported US job openings “dropped by 123,000 to a seasonally adjusted 7.05 million in August, the lowest level since March 2018,” the government reported Wednesday. Reuters said the decline “suggest[s] employment growth was slowing largely because of ebbing demand for labor as the economy loses momentum.”
Powell: Despite Risks, Economic Outlook “Favorable,” Continued Growth “Most Likely” (10/15/2019)
Reuters (10/8, Schneider, Saphir) reported that on Monday, Federal Reserve Chairman Jerome Powell “flagged openness to further rate cuts amid global economic risks, and said the time to allow the Fed’s asset holdings to begin to expand again ‘is now upon us’ in order to ensure money markets function smoothly.” In “comments...to the National Association for Business Economics,” Powell “did not commit to further rate cuts, and noted that the economic outlook remained ‘favorable’ and continued growth ‘most likely.’” Powell, however, also “repeated that as global risks evolve the Fed would move ‘as appropriate’ to keep the decade-old expansion under way.” The AP (10/8, Rugaber) quoteed Powell as saying, “At present, the jobs and inflation pictures are favorable,” but “there are risks to this favorable outlook.” Powell, adds the AP, was “referring specifically to the US-China trade war and Brexit,” and to the fact that “major overseas economies, such as Germany, are also stumbling.”
Small Business Marketing Capital One Survey: Small Business Owners Confident, Even As Recession Concerns Mount (10/15/2019)
In continuing coverage, the Motley Fool (10/9, Kline) reported that the new Capital One Small Business Growth Index shows that nearly two-thirds of small business owners believe current business conditions are “good or excellent,” even as 43% of respondents “say they are concerned that a recession will impact the success of their business in the next year.” There is considerable overlap between the two groups, according to the article, with the Capital One survey finding that there are many “who believe that conditions are good or excellent now but also feel that a recession may be coming.”
Fintechs Increase Small Business Lending (10/15/2019)
Eden Amirav, CEO and co-founder of Become, wrote in Payments Source (10/9) that many small businesses are “crunched for credit, but where traditional banks have failed to meet entrepreneurs’ needs, a rising breed of fintech upstarts are starting to fill the void.” Amirav pointed to the recent launch of Stripe Capital as an “encouraging preview of how this new breed of lenders can help fuel small business growth through a tech- and data-savvy approach.” While he argued Stripe’s move to “start offering loans to its merchants represents a step in the right direction,” Amiraz believes that “to truly succeed, lenders like Stripe will need to expand their lending to small businesses beyond their own merchants.”
Study: Banks Failing To Meet The Needs Of SME Clients (10/15/2019)
Bank Innovation (10/8) reported that a new study from Forrester Research has found that banks “should be leaning more on digital than human” as they turn their attention to small business clients, arguing that “banks should be investing more in digital services that make onboarding processes simpler for their small and medium-sized business clients (SMEs).”
Stripe’s Move Into Small Business Lending Questioned (10/15/2019)
The Financial Times (10/9, Subscription Publication) questioned Stripe’s move into small business lending amid growing signs of a recession. The piece said investors should raise objections to offering loans to risky borrowers.
Banking-As-A-Service For Small Business Lending On The Rise (10/08/2019)
LendIt (10/4) reported, “most small banks and credit unions do not have the resources to build a fully digital small business lending experience so they often lose this business to fintechs and big banks.” The piece said Streetshares “offers a lending-as-a-service solution specifically targeted at these smaller financial institutions to help them compete with the larger players; it is not just about competing with larger banks, companies like PayPal and Square are some of the largest small business lenders in the country now and they are offering a completely digital lending experience.”
Community Banks See Bright Future Even With Wall Street Uncertainty (10/08/2019)
Reuters (10/3, Schneider) reported that “the view from Wall Street may be all trade wars, tariffs and uncertainty these days, but ask a Main Street banker and things are pretty darn good.” A healthy housing market, growing small business sector, and solid consumer spending levels have supported most banks throughout the country, even as declining global trade levels weigh on Wall Street. At a recent conference hosted by the St. Louis Fed, Conference of State Bank Supervisors executive Michael Stevens said that Fed officials have “continually made the point that the economy is on a strong footing. Employment is strong. The household sector is strong. When you get down to that local level – I see consistency” with the Fed’s view of a continued household-driven expansion.
Wages and Benefits District Judge Expected To Rule On H-2A Minimum Wage Injunction (10/15/2019)
The Salem (OR) Capital Press (10/10, Wheat) reported from Richland, Washington that US District Judge Salvador Mendoza Jr. is expected to “rule soon on a request from tree fruit growers for a preliminary injunction to halt an increase in the minimum wage for tree fruit workers.” During arguments on October 9, Mendoza “said he understands harvest is underway and that a decision is needed quickly, said Peter Spadoni, a Wenatchee attorney representing McDougall & Sons Inc. and Columbia Fruit Packers Inc., both of Wenatchee, and Evans Fruit Co., of Cowiche.”
Amazon Faces New Suit Over Overtime, Wage Claims In Federal Court In Washington State (10/15/2019)
Bloomberg Law (10/10, Dailey, Mulvaney, Subscription Publication) reported a new suit filed in the US District Court for the Western District of Washington by a driver employed by an Amazon Delivery Services Partner claims the e-commerce company is responsible for overtime claims from drivers. The suit argued Amazon is more of a joint employer to these drivers than a purchaser of services from the DSP company and “is the latest to argue the Seattle-based online retailer should be liable for overtime and minimum wage violations,” the story reported. Amazon “has been the subject of litigation over joint employment for the work it contracts out, including cases in Florida, California and North Carolina,” Bloomberg Law added.
WSJournal Analysis: Social Security Discussion Has Shifted Left (10/08/2019)
The Wall Street Journal (10/5, Rubin, Davidson, Subscription Publication) reported the discussion over social security has shifted to the left, with the President having ruled future benefit reductions out and Democrats having united behind greater taxes and bigger benefits.
Warren Unveils Plan To Raise Wages, Strengthen Worker Rights And Unions (10/08/2019)
The Hill (10/3, Klar) reported, “Sen. Elizabeth Warren (D-Mass.) unveiled a plan to raise wages and strengthen the rights of workers to organize on Thursday” as part of her presidential campaign. If elected, the Senator “said she would sign an executive order requiring federal contractors to pay a $15-per-hour minimum wage, and she said she’d push Congress to pass a $15-per-hour minimum wage for all workers, including disabled workers and tipped workers.” She would also “prohibit states from adopting ‘right to work’ laws, and that she would back ‘card check’ rules strongly opposed by business groups that would make it easier for unions to organize workers by allowing a union to be certified if a majority of employees sign union cards or otherwise offer support.”
Study Finds 70% Of US Workers Likely To Quit Within A Year At $7.25 Minimum Wage (10/01/2019)
CNBC (9/25) discussed turnover for small business, saying a recent analysis found “employees earning $7.25/hour (the current federal minimum wage) have a 70% chance of leaving within a year.” This is more “than double the average turnover rate of 32%.” CNBC said the study comes “alongside the recent passage of the Raise the Wage Act in the U.S. House of Representatives,” which “proposes a gradual increase to the federal minimum wage from $7.25/hour to $15/hour by 2025.”
States “Scrambling” To Fund Job-Training Programs As Older Adults Increasingly Work Past 65 (10/01/2019)
The Chicago Tribune (9/24, Henderson) published a piece by “Stateline,” reporting that more and more US workers are continuing to work past the age of 65, “both out of financial necessity and to stay busy.” The US Bureau of Labor Statistics predicts this trend will increase over the next 10 years, projecting that the share of older adults working or looking for jobs will rise from 19.6% in 2018 to 23.3% in 2028. The article says “states are scrambling to fund more job-training programs” for older adults, such as the Senior Community Service Employment Program, which “pays minimum wage to people 55 and older to work for nonprofits and public organizations, such as schools and hospitals, while they gain skills and references for the open job market.” SCSEP “requires participants to have incomes no more than 125% of the poverty level.”
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