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NFIB Economic Report
- 7/21/2009According to the report, the economy is bouncing along the bottom and reorganizing itself to restart the growth process. Many indicators are now headed up. They are still in “negative” territory, but will soon break the surface and become positive. The labor market indicators seem to be finding a foothold. Based on the June numbers, the unemployment rate is expected to head down to 8.8% over the next three months, consistent with a return to growth in the third quarter (as predicted last year).
In credit markets, the June data indicate that borrowing conditions might be easing a bit, but as the recession lingers, more are running into cash flow problems and report financing as their top business problem (6%, up from 3% earlier in the year, but very low compared to over 35% for most of 1982. The NFIB data contradict all the media claims that small businesses cannot get credit. There was no significant difference in the patterns of the credit statistics in this expansion than in past expansions. The real challenge to credit availability will come in the next two years as we try to finance trillions of dollars of federal and state deficits.
The inflation threat is an empty one near-term. There is plenty of excess capacity and labor to support a lot of growth before price pressures surface. However, the longer the recession goes on, the larger the amount of “capacity” that gets shut down in one form or another, raising concerns about pressures a year from now when the economy is growing. The Consumer Price Index inflation has been negative over the past 12 months, but that is a result solely of energy price declines. Other prices have been increasing.
Read the full report at nfib.com.
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