Market Overview Analysis by Lance Roberts covering: . Read Lance Roberts's latest article on Investing.com
The latest National Federation of Independent Business survey was an economic warning that departed widely from more robust governmental reports. In“It is crucial to understand that small and mid-sized businesses comprise a substantial percentage of the U.S. economy.Small businesses drive the economy, employment, and wages.
Of course, given that capital is the lifeblood of any business, decisions on hiring, capital expenditures, and expansion hang in the balance.It should be unsurprising that if the economy were expanding as quickly as headline data suggests, business owners would be expending capital to increase capacity to meet rising demand.
As shown, the correlation between small business CapEx plans and economic growth should not be dismissed. While mainstream economists are becoming increasingly optimistic about anOf course, if small businesses are unwilling to increase CapEx, it is because there is a lack of demand to justify those expenditures. Therefore, if CapEx is falling, we should expect economic warnings from employment and sales.Many reasons feed into a small business owner’s decision NOT to invest in their business.
Unsurprisingly, business owners are always optimistic that sales will improve in the next quarter. However, actual sales tend to fall short of those expectations. The two have a very high correlation, which is why the average of both provides valuable information. Sales expectations and actual sales are well below levels typically witnessed during recessions. With salesHere is the economic warning to pay attention to.
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