The Florida Chamber of Commerce just released its survey of small businesses, with results that are . . . well, mixed. Seems like that’s the norm in economic news these days, unless we are talking about temporary market cascades over the latest news from China.
The good news: almost half of the responding small businesses reported that sales over the last three months were higher than they were a year ago (a quarter of all responding businesses reported sales declines). More solid still, fully 77% expect that their sales will increase over the next year.
The not-so-good-news: job growth is likely to be tepid, given the small percentage of small business owners who indicated an intention to expand their workforce in the coming year.
It’s an oft-repeated truth that small businesses are the main drivers of employment. When we land a big corporate relocation and talk about all the jobs they will bring, those jobs themselves aren’t the main economic stimulus. The stimulus is the money those new employees will spend in Florida, and the various new expenditures for goods and services to be made locally by that corporate office, warehouse or factory. That new money is what really drives the local economy and expands employment opportunities. It’s called a multiplier effect.
(In passing, I’ll note here that many economists believe that, dollar-for-dollar, the biggest multiplier comes from public expenditures, for a variety of reasons I won’t discuss here.)
So it isn’t the jobs in that corporate headquarters or warehouse or big box destination retail outlet that actually are the big economic news. It’s what those employees will spend, and what the company will spend, that wasn’t cash in the local economy before.
Small businesses in Florida are seeing growth in their sales. There’s more money flowing in the economy this year than last year.
But one senses in their reluctance to hire that their overall confidence in the economic future isn’t as strong as one might wish. Yes, most think things will continue to get better . . . but most also appear to be hedging their bets.
In a very real sense, our economy is driven as much by attitudes as it is by revenues. Consumers borrow more freely when they expect their incomes will grow in the future, preferring to pay tomorrow for that new living room suite today and believing that, when tomorrow comes, the money will be there.
Spending is elastic downward, too. Between July 2008 and July 2010, total consumer debt in the U.S. dropped by nearly $160 billion as many consumers tightened their belts and, at the same time, found the resources to pay down the debt they already had accrued.
The good news/bad news of the chamber survey continues a steady stream of mixed economic news. Better, but not good enough. Worrisome, but not really that bad.
The bigger picture may be our need to help the unemployed, the underemployed and the soon-to-graduate, to think and act in a more focused fashion to achieve their economic goals. Jobs in certain industries continue to go begging for lack of workers with the appropriate skills. And, my impression anyway, many capable young adult workers haven’t yet understood what a path to financial security might look like in the 21st century.
Maybe none of us have. Certainly the hesitancy of small businesses to hire could be read as saying that our biggest job generators are still struggling to master 21st century economics.