Small Business Intentions? Negative Capital Outlay, No Hiring for 2013

“U.S. small-business owners' net capital spending intentions for the next 12 months plunged to
-14 in November, the lowest level in more than two years, according to the Wells Fargo/Gallup Small Business Index.”

"Consistent with these negative expectations, owners' intentions are to reduce their capital spending plans and their hiring intentions over the months ahead."

- Gallup economy, 12/13/2012

Full story below:

　

http://www.gallup.com/poll/159212/small-business-owners-pull-back-capital-spending-plans.aspx

BLS Employment Situation 07/06/2012 [BLS Jobs Report]: the Average Work Week and the Fiscal Cliff

Perusing the Bureau of Labor Statistics Employment Situation 07/06/2012 report/press release one might find insight by looking at the top of page three. The report states that the average work week for production and non supervisory employees stands at 33.8 hours. That means the average firm X, assuming average firm X needed more production, average firm X has many more hours to employ current employees before they reach the tipping point of adding more employees. That is, average firm X has another 6.2 hours per week to employ per worker assuming a 40 hour work week and that workers desire a 40 hour work week and the income associated with 40 hours. (1)

Further, if average firm X reached 40 hours per employee, many firms will run production based overtime initially, in that, they want to be certain (expectations/uncertainty) that demand is such that extra employees are warranted (run overtime production as a wait-and-see strategy). Keep this in mind for a moment.

On the other hand, note at the bottom of page two, continuing to page three, that manufacturing is at 40.1 hour work week with overtime at 3.3 hours for the fifth consecutive month. Hence manufacturing is exhibiting the phenomena mentioned in the above paragraph i.e. run overtime production as a wait-and-see strategy. (2)

Hence “being ahead of the curve” for the firm regarding human capital is heavily weighted to the expectation of “certainty”. It’s not that the average firm doesn’t see trends approaching, but the average firm wants certainty in the trend.

Now consider the fiscal cliff which is the simultaneous series of tax increases and spending cuts scheduled for year end 2012. Some pundits and talking heads are holding forth the notional proposition ridiculous that as the fiscal cliff to approaches and nothing of significance will occur e.g. Chad Stone at the Center for Budget and Ppolicy Priorities, a union funded think tank. Merely one example of a zillion appears above, in that, the expectation of a trend of uncertainty, caused by the approaching fiscal cliff, would affect the employment phenomena mentioned above, in a negative way.  (3) (4)

Expectations do count. Uncertainty does count.

Notes:

(1)THE EMPLOYMENT SITUATION —JUNE 2012, page 3

http://www.bls.gov/news.release/archives/empsit_07062012.pdf

(2) ibid, pages 2 and 3

　

(3) What is the Fiscal Cliff? About.com

http://bonds.about.com/od/Issues-in-the-News/a/What-Is-The-Fiscal-Cliff.htm

(4) Misguided “Fiscal Cliff” Fears Pose Challenges to Productive Budget Negotiations, Chad Stone, 06/18/2012, Center for Budget and Policy Priorities

http://www.cbpp.org/cms/index.cfm?fa=view&id=3788

　

Take the “If the Economy is Getting Better” Quiz!

The blog TheEconomicCollapse has compiled a short quiz on the subject of the media’s relentless taking point that “….the economy is getting better”. (1)

Try the "If the economy is getting better" Quiz!



　

　

　

If the economy is getting better, then why did new home sales in the United States hit a brand new all-time record low during 2011?

If the economy is getting better, then why are there 6 million less jobs in America today than there were before the recession started?

If the economy is getting better, then why is the average duration of unemployment in this country close to an all-time record high?

If the economy is getting better, then why has the number of homeless female veterans more than doubled?

If the economy is getting better, then why has the number of Americans on food stamps increased by 3 million since this time last year and by more than 14 million since Barack Obama entered the White House?

If the economy is getting better, then why has the number of children living in poverty in America risen for four years in a row?

If the economy is getting better, then why is the percentage of Americans living in "extreme poverty" at an all-time high?

If the economy is getting better, then why is the Federal Housing Administration on the verge of a financial collapse?

If the economy is getting better, then why do only 23 percent of American companies plan to hire more employees in 2012?

If the economy is getting better, then why has the number of self-employed Americans fallen by more than 2 million since 2006?

If the economy is getting better, then why did an all-time record low percentage of U.S. teens have a job last summer?

If the economy is getting better, then why does median household income keep declining? Overall, median household income in the United States has declined by a total of 6.8% since December 2007 once you account for inflation.

If the economy is getting better, then why has the number of Americans living below the poverty line increased by 10 million since 2006?

If the economy is getting better, then why is the average age of a vehicle in America now sitting at an all-time high?

If the economy is getting better, then why are 18 percent of all homes in the state of Florida currently sitting vacant?

If the economy is getting better, then why are 19 percent of all American men between the ages of 25 and 34 living with their parents?

If the economy is getting better, then why does the number of "long-term unemployed workers" stay so high? When Barack Obama first took office, the number of "long-term unemployed workers" in the United States was approximately 2.6 million. Today, that number is sitting at 5.6 million.

Notes:

(1) http://theeconomiccollapseblog.com/archives/if-the-economy-is-improving

Vernon Smith Regarding Experimental Economics

“Expectations” a major variable in economics is merely a myth?

On Sunday 04/03/2011 edition of the “This Week” program crazy old uncle Paul Krugman, Noble prize wiener-whiner at larger, decided to rewrite economic theory in 20 seconds or less. You see, one of the major variables in economics, which is expectations, is merely a myth.

Which then begs the question: is expectations a myth or is the more likely case that crazy old uncle Paul is the myth?

It becomes a mighty sad case when a Noble prize winner in economics constantly, clearly, and repetitiously shows why he should have never won the prize in the first place.