Small-business leaders see an intensity of uncertainty

Mitt Romney arrives with lunch to speak to small-business owners in Irmo, S.C.
Mitt Romney arrives with lunch to speak to small-business owners in Irmo, S.C. (MARY ANN CHASTAIN / Associated Press, File)
Posted: September 18, 2012

Small-business owners' concerns about government policies have intensified since the deep recession and a recovery that doesn't feel much better.

Karen Kerrigan serves the Small Business & Entrepreneurship Council as president, and Raymond Keating is its chief economist.

The 18-year-old council, which has 100,000 members, takes a stand similar to other groups: Small businesses are struggling because they have to contend with too many taxes and regulations - words that are coming up a lot in presidential campaign speeches, videos, and commercials.

Following are excerpts from a recent interview.

Question: What are the biggest issues in this presidential campaign for your members?

Kerrigan: They're very concerned about the economic outlook and the financial stability of their firms and their competitiveness moving forward. That's not at all being helped in terms of government policies. ...

They're concerned about the expiring tax measures and what's going to happen with the tax code. It didn't start when everyone else started talking about the fiscal cliff. It's been on their mind for a longer period of time because they do long-term planning in terms of their businesses and what kind of resources they're going to have for investment, [to] pay down debt, etc. ...

We've talked about uncertainty so much. Now, I think intensity is the new word. The intensity of their concerns has definitely picked up not only now because of this looming [tax] deadline and the threat that poses from an economic perspective on their firms. But also you have a host of other issues. ...

We have the new health-care law. Many continue to see their costs go up, not down. ... You have rising prices when it comes to energy and gas, supplies, raw materials. ...

Q: What parts of the economy or the country look stronger or weaker?

Keating: Stronger? ... It's very difficult to pick out a good place. One of the things about this recovery is, not only has it been so poor, but you get those little bits of hope, maybe a jobs number that comes in OK, some profit numbers that are all right for a while. But then they fade away very quickly. I think when you bring that down to the small-business level, it's just very difficult to pick out an area where things are just rocking. ... Even the ones that are doing well in this environment have worries and concerns.

Kerrigan: One of the sectors that has done better than most industries are the small and midsize firms in the tech sector because there continues to be innovation and investment. That's developed whole other industries - the mobile app industry. ... But while access to growth capital has not been a major concern with that industry, we along with the Financial Services Roundtable put out a survey in November that broke down the different industries within the tech sector, and their No. 1 concern at that point was access to growth capital. So even that sector, too, is beginning to feel ... a lot more uncertain.

Keating: One other area that has been mentioned as a positive is North Dakota. They've become a tremendous energy producer with the change in technology, with fracking. They've become the No. 2 oil producer. ...

Kerrigan: The shale region, as well, pockets of Pennsylvania and Ohio. There's a lot of activity with fracking, and different types of small business have benefited from that. Your typical retail mom-and-pop and many small businesses that operate in that industry. ... But we're hearing a lot of bad news from manufacturers in terms of their orders. One of my members just told me, "I got a month worth of work on the books, where it was four or five months out." He's got large customers starting to hold orders. That's not good news.

Q: What's your sense of how the housing market is doing?

Keating: Housing goes back to the overall state of the economy: Are businesses creating jobs, and do people therefore feel secure? Do they feel like they're going to remain employed? Do they feel like their incomes are going to go up, or are they still facing stagnant or declining income?

So all those questions along with a whole host of others come into the housing mix, and again, I don't see any clarity on it.

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