Vital Statistics:
Stocks are recovering after yesterday’s big sell-off. Bonds and MBS are up.
Small Business Optimism declined again in February, according to the NFIB. We remain above the 51 year historical average, but confidence is falling. Labor quality remains the biggest issue, with inflation the second. The number of firms reporting higher prices increased to the highest level since April 2021. Some of this might have been the typical annual price increases along with companies getting ahead of future tariffs.
“Confidence that the economy will continue to grow is fading. The net percent of owners expecting better business conditions in the next six months lost 10 percentage points and the percent viewing the current period as a good time to expand fell 5 points to 12 percent (but stayed well above the 6 percent reading last October). Capital spending plans fell 8 points from December, and hiring plans dropped 4 points. All consistent with the general tone of the financial press, the economy is still growing, but at a slower and slower rate, storm clouds are forming.”
“Inflation remains a major problem, ranked second behind the top problem, labor quality. Owners want to see prices fall after the 20 percent rise over the last four years. President Trump’s plan to lower energy prices could help, but history says it takes a slowdown (recession) to significantly reduce the price level and that’s not an ideal solution. The percent of owners raising and planning to raise prices (and wages) are too high to reach that 2 percent inflation rate for goods and services whose prices are market determined (not imputed like rent, etc.). More firms report lower employment than higher and the average employment change is negative. While we wait and watch, a lot of churning is likely to occur. Hold on to your seats!”
As you can see in the chart above, small business optimism spiked on Trump’s election but has retraced a little.
Are you a mortgage originator with a bookkeeper, but no financial analyst? Are you doing without an annual budget because you don’t have the time / resources to develop one? Are you considering an acquisition, and want an in-depth analysis of the potential synergies and impact on the bottom line? Perhaps you have some projects that need to be done, but you can’t justify a full-time hire.
I am a consultant who has extensive experience in capital markets, secondary marketing, FP&A, budgeting, and servicing. If you think you might have a need, let’s set up a discovery call.
Please reach out to brent@thedailytearsheet.com
