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Jolts, Small business index, Redbook retail sales

Summary:
When this chart heads lower as it’s doing it’s all over: The chart is well below what in the past were recession levels, and still looking like it can go a lot lower: Highlights The small business optimism index rose 0.8 points in October to 94.9, slightly exceeding expectations and extending a rebound from the 2-year low at 92.6 set in April. Of the 10 components of the index, 5 posted gains, 3 were down and 2 remained unchanged. The largest gain was recorded in plans to increase inventories, which rose a strong 9 points from the September level to a net 2 percent. The net percent of owners considering stocks too low also rose by 3 points to a net negative 4 percent, reflecting stronger consumer spending in the third quarter. And the already tight labor market tightened further, with 28 percent of owners reporting jobs they could not fill, up 4 points from September. A net 25 percent of owners reported raising worker compensation, a 3 point increase from September. Capital outlays, a leading strength of the index recently and important for future growth, remained at a strong 27 percent, the second highest reading of the recovery. But after a 12-point jump in expectations of improvement in business conditions to 0 percent in September, small business owners revised their optimism back down in October, with the index falling 7 points to a net minus 7 percent.

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When this chart heads lower as it’s doing it’s all over:

Jolts, Small business index, Redbook retail sales
The chart is well below what in the past were recession levels, and still looking like it can go a lot lower:

Jolts, Small business index, Redbook retail sales

Highlights

The small business optimism index rose 0.8 points in October to 94.9, slightly exceeding expectations and extending a rebound from the 2-year low at 92.6 set in April. Of the 10 components of the index, 5 posted gains, 3 were down and 2 remained unchanged. The largest gain was recorded in plans to increase inventories, which rose a strong 9 points from the September level to a net 2 percent. The net percent of owners considering stocks too low also rose by 3 points to a net negative 4 percent, reflecting stronger consumer spending in the third quarter. And the already tight labor market tightened further, with 28 percent of owners reporting jobs they could not fill, up 4 points from September. A net 25 percent of owners reported raising worker compensation, a 3 point increase from September. Capital outlays, a leading strength of the index recently and important for future growth, remained at a strong 27 percent, the second highest reading of the recovery.

But after a 12-point jump in expectations of improvement in business conditions to 0 percent in September, small business owners revised their optimism back down in October, with the index falling 7 points to a net minus 7 percent. Expectations of future increases in sales dimmed by 3 points for a net negative 4 percent of owners. Despite this, a net 9 percent still thought that now was a good time to expand, up 2 points from the prior month. Earnings, however, continued as the biggest source of pessimism and the weakest component of the index, worsening by 1 point as a net negative 21 percent of owners reported an improvement in quarter on quarter profits.

Prices remained subdued, as a net 2 percent of owners reported raising prices, up 3 points from September, and a net 15 percent plan to hike prices, down 3 points.

Jolts, Small business index, Redbook retail sales
This measure of retail sales remains depressed, maybe because health care premiums have diverted retail consumption?

Jolts, Small business index, Redbook retail sales

Jolts, Small business index, Redbook retail sales

Jolts, Small business index, Redbook retail sales

WARREN MOSLER
Warren Mosler is an American economist and theorist, and one of the leading voices in the field of Modern Monetary Theory (MMT). Presently, Warren resides on St. Croix, in the US Virgin Islands, where he owns and operates Valance Co., Inc.

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