Economics 101: Small Business Cuts Back on Spending After Obama Election Victory


We have some news here. It’s not surprising to me. “US small business owners’ net capital spending intentions for the next 12 months plunged to minus 14 in November, the lowest level in more than two years, according to the Wells Fargo/Gallup Small Business Index. This is down from net capital spending intentions of minus 1 in July and suggests the nation’s small business owners are likely to pull back on their business investments even more, given their negative expectations for the next 12 months.”

Now, I give you an illustration. In 2004, 2005, 2006, 2007, this index — the Wells Fargo/Gallup Small Business Index on Capital Spending Intentions — was at anywhere from plus 28 to plus 16. Its low was minus 23 in 2009. Now it is minus 14. We’ve had, therefore, a net drop-off of 30 points. When you see it on the graph, it makes a little bit more sense. But as recently as 2008, small business net capital expenditure expansion spending was big, it was huge, and now it’s at minus 14 for the next 12 months.

So it means no economic growth.

It means small business, which does most of the hiring, isn’t gonna be doing any.



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