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Friday, November 30, 2012

Store Sign: 'Obama Was Re-elected So We're Closing Our Doors Sale'

By Susan Duclos

Crown Couture in Cedar City announced it would be going out of business Thursday with this banner.
Crown Couture, a clothing boutique at 535 South Main St. in Cedar City, has the banner above prominently located at the front of the business. The owner of Crown Couture says while Obama's policies are not the only reason she is closing down her business, but that big businesses might be able to handle a rise in their taxes by the Obama administration, she cannot and that her accountant recommended the closing of her store.

“I’m not a millionaire or a billionaire, but when the tax cuts expire, I’ll have to pay more. It’s the reason I’m closing on January 1 instead of later in the year,” Blake said. “I want to stay open for the (employees), but I can’t. Big businesses can work it out, but I can’t.”

Blake is not the only business on that same street that feels as Ms. Blake does:

 Dave Bartlett, an entrepreneur and small business owner, runs Hollywood Video and Game Crazy at 430 South Main Street. He said he will do whatever it takes to stay open, but adds that it’s a tough time to own a small business.

“Trying to build a business, grow a business or even just make it right now is expensive,” Bartlett said, adding that he is worried about growing a business and hiring employees with a healthcare mandate, an expense he says he can’t afford.

 Thursday we reported on two the Wisconsin Manufacturers and Commerce surveys, one conducted before Obama was re-elected and one in late November, where Wisconsin business owners showed a 38 percent decrease in those that planned to hire more people and expand, 62 percent down to 24 percent, and an 18 percent rise in WI. businesses planning to decrease their workforce, from 2 percent to 20 percent.

The reasons cited by WI. business owners were the economy and Obama's tax, health care and regulatory policies.

(2013 Economic Outlook survey embedded at the link above and can also be found here)

Wisconsin business owners and small business owners like  Ms. Blake and Mr. Bartlett, quoted above, are just the tip of the iceberg as Gallup finds in it's latest release that there has been a decline in optimism among small business owners across the country.

• U.S. small-business owners are pessimistic post-election, with the Wells Fargo/Gallup Small Business Index plunging to -11 in November from 17 in July. This is the most pessimistic that owners have been about their operating environment since July 2010, when the index stood at -28.

•  The Future Expectations Dimension of the index, in which owners rate their expectations for their business over the next 12 months, fell 19 points to -1 in November. Small-business owners' future expectations are at their lowest level since July 2010, when this dimension stood at -2.

• Owners' expectations for their financial situation, cash flow, capital spending, and hiring over the next 12 months all worsened significantly in November.
  • One in five small-business owners (21%) expect the number of jobs at their company to decrease over the next 12 months, the highest percentage Gallup has measured to date.
  • One in three owners (34%) expect their company's capital spending to decrease over the next 12 months -- the highest recorded since July 2010.
  • Thirty percent of owners expect "poor" cash flow over the next 12 months -- the highest Gallup has measured to date.
  • Twenty-eight percent of owners expect to be in a "poor" financial position 12 months from now -- the highest Gallup has measured to date.

The implications according to Gallup:

One of the more stunning aspects of the November survey results is the decline in small-business owners' optimism for the future. As entrepreneurs, small-business owners tend to be optimistic by nature, and relatively more optimistic about the future than the present. Given this context, owners' increasing pessimism toward their future not only reflects uncertainty, but also may imply a weakening economy going forward.

Owners' intent to reduce capital spending in the months ahead is consistent with a slowing economy. Small-business owners appear to be uncertain about their future operating environment, and uncertainty is a legitimate reason for them to hold back on new capital expenditures at this time.

Another troubling finding is the intention of 21% of small-business owners to reduce the number of jobs at their company over the next 12 months. This suggests the potential for a significantly higher unemployment rate in 2013 and all of the accompanying negatives that fewer jobs imply for the economy -- particularly given the importance of small-business hiring to the U.S. job market.

When we hear Barack Obama constantly argue for higher taxes on the "wealthy", the people above, U.S. small business owners who file individually, are the ones Obama isn't mentioning, the ones that will be caught in Obama's "tax the rich" trap.