|Posted by G on February 12, 2011 at 9:12 PM|
The National Federation of Independent Business' optimism index rose 1.5 points to 94.1. Despite the increase, the index still remained near low levels. "The average reading before the recession started was 100". The NFIB said in a statement, "Expectations improved, but not spending and hiring plans, more hope than action." The survey, which was conducted through January 31, showed respondents were concerned about sluggish sales.
Fifteen percent of those surveyed reported reducing employment an average of 2.9 employees. The average increase in employment per firm was negative for 33 of the last 37 months. It is always reported that Small businesses are seen critical to job creation, which disappointed in January. The government reported employers added a mere 36,000 jobs last month.
The Labor Department reported this week that Job openings fell for the second straight month in December. Another sign that hiring is still weak. Employers advertised a little less than 3.1 million jobs, a drop of almost 140,000 from November. That's the lowest total since September 2010.
The Commerce Department reported Thursday Businesses at the wholesale level added to their inventories in December by a mere 1%. Even though demand for their products slowed. Sales at the wholesale level rose 0.4 percent in December, a smaller than expected increase and the poorest showing since last July.
According to projections by the nonpartisan Congressional Budget Office Income tax payments this year will be nearly 13 percent lower than they were in 2008. Corporate taxes will be lower by a third. Actually, as a share of the nation's economy, Taxes collected this year will be the lowest since 1950.
The poor economy is largely to blame, with unemployment up, but so is a tax code that grows each year with new deductions, credits and exemptions.
So, when we hear all of the talk about America's rising deficit, recognize that if we extend unemployment insurance for all Americans, taxes are paid on those dollars. Those receiving unemployment insurance spend those dollars, a portion of which goes toward sales tax, which all go back to bringing the deficit down. By the way, the other minor benefit that comes as a result of those dollars being spent by the unemployed is that demand goes up and we see job creation.
The trade deficit widened in December, closing out a year in which America's trade gap ballooned by the largest amount in a decade. The Commerce Department says the deficit in December increased 5.9 percent to $40.6 billion.
For all of 2010, the U.S. trade deficit rose to $497.8 billion, a 32.8 percent surge. It was the biggest annual percentage gain since 2000. Economists believe the deficit will keep widening in 2011 and that U.S. manufacturers will benefit from a weaker dollar, which makes their goods more competitive in foreign markets.
This report translates into two distinct problems for the US economy. When exports exceed imports it is a clear sign that Americans either are not spending money or don’t have the money to spend on consumer goods and both are true in today’s economy. The second problem is that if businesses are recognizing larger profits overseas, where do you think they are going to focus their resources… overseas. U.S. Business will follow the money.
Extend unemployment insurance for all American’s and spending goes up, then the focus can shift back home and the hiring process begins again.