What Small Businesses Are Telling Us
It's not what I was expecting
The February NFIB Small Business Optimism Index came in much lower than expected. The expected number was 90.5 and the number came in at 89.4. That sets a 9-month low.
There turned out to be some areas that are a bit concerning.
The one part that surprised me the most was that the single most important problem for small businesses is poor sales. It’s now at the highest level since June 2021.
As Renaissance Macro points out, this measurement of poor sales reporting on the NFIB survey has seen very strong correlation to the unemployment rate.
When you start hearing poor sales that directly starts to affect hiring plans. The results from the NFIB survey came in as you would expect. Hiring plans went down significantly. The only point in the last 7 years where it was worse was during the Pandemic lockdown of 2020.
The NFIB hiring plans results just like the NFIB poor sales can also be traced back to indicate possible labor and economic weakness ahead as this chart indicates.
The lowered hiring plans look to be starting to show up in some jobs data already. February saw another decline in temporary help services payroll. You can see that this drawdown continues to be consistent with previous recessions.
We’re also seeing data from BofA show the quits ratio and small business labor demand at the lowest level since Q2 of 2020.
You can start to see how much of this runs together. As you look back historically this has shown some of the early indicators of rough waters ahead.
Small business survey data is some of the most readily available as it’s reported monthly. Small businesses employ almost half the US workforce and account for roughly half of US GDP. What they’re doing and saying is important. It matters to the economy.
The stock market isn’t main street. We’ve seen their disconnects in the past. Could this be another example of that? It remains to be seen what lies ahead.
The Coffee Table ☕
There has been a lot of talk regarding the settlement by the National Association of Realtors which will change the way real estate agents are compensated. The standard 6% commissions will now be gone. I’ve been reading about it and this is one of the better posts I’ve read on the subject. Are Homebuyers Hit Hardest By Landmark Realtor Lawsuit? I don’t think anyone knows forsure how this will all end up affecting buyers, sellers, agents or prices. It’s all going to have to play out.
I thoroughly enjoyed this post by
called Optimizing Time: 5 Enduring Principles. Myles wrote about turning 40 and the 5 principles that he’s learned. It’s all completely on point and worth the time to read. Belated Happy Birthday Myles!Just a reminder that tonight (March 20th) Top Chef Season 21 on Bravo starts. This season was filmed in Wisconsin. If you’re into food, cooking or eating this is a must watch show. It’s long been one of the favorite shows that my wife and I watch together every year.
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