Thomas Oliver: Uncertainty is the enemy

By Thomas Oliver

The Atlanta Journal-Constitution

Here we go again.

With proposals for creating jobs in our small businesses that owners say won’t do the trick.

The problem small businesses face (larger businesses, too) is a lack of customers, noted in the drop in sales. That being the case, a tax credit for new hires doesn't address the problem.

Hiring will commence when business picks up. Business will pick up when customers return to purchase products and services. Customers will return when they sense the worst is over and no longer worry about their jobs or whether Washington is going to throw them some curveball that will end up costing them.

In other words, uncertainty is holding everything and everyone back, from consumers to businesses, from purchases to hiring.

After all, even with 10 percent unemployment, the large majority have jobs. Most are paying bills and saving. They just aren’t spending.

And who can blame them?

They are also taxpayers, parents, young adults starting families, retirees and patients of the country’s doctors.

How could any in those groups feel confident about the economy? Or proposed new policies?

Certainly not those who are also small business owners.

Surveys of small businesses continue showing similar results: Plans for expansion, hiring or capital investments are at or near all time lows, according to the monthly survey of the National Federation of Independent Business.

The Atlanta Federal Reserve, which may conduct as many surveys as financial transactions, recently surveyed small businesses in Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee about their access to credit.

Turns out that access to credit, or lack of, isn’t the main factor restricting growth.

As John Robertson, vice president in the Atlanta Fed's research department, wrote on the Fed’s Macroblog:

“It appears most going concerns have been able to obtain all or most of the credit they need. What they don't have are customers.”

Larger businesses aren’t immune from this phenomenon. The profits from public corporations last year, which helped fuel the stock market’s rise, were somewhat of an illusion. They were created mainly by cutting costs, not generating new business and increasing revenues.

That cost cutting was mainly done though eliminating jobs.

We are liable to see more cost cutting, as consumers remain cautious.

Businesses large and small, as well as consumers, are all in the same boat. We’re waiting for the fog to clear.

Earlier this month, Atlanta Fed president Dennis Lockhart noted that businesses were holding back on their plans pending “clarification of future government policy in the areas of health care, taxes and climate change.”

The NFIB’s response to the State of the Union sounded a similar refrain:

“Small business owners need to know that their taxes will not increase, that new expensive mandates will not be imposed and that additional burdensome regulations will not be implemented.”

The president and Congress “must realize that uncertainty over their legislative agenda is impeding job growth,” NFIB noted after the speech.

Only a cynic would ask: Even if they came to that realization, would they forego their agenda for job growth?

Thomas Oliver writes the Sunday business column. He can be reached at toliver.writeright@gmail.com