So Much For Optimism


Indicators point toward a national economic recovery, but the improvements didn't bolster confidence among small businesses in May, a new survey found.

Business owners in Las Vegas, which has higher unemployment and weaker economic activity than the rest of the nation, backed up the survey's results Monday, saying they don't expect economic conditions to improve anytime soon.

Fewer than one in five small-business owners nationwide said they believe the country's economic recovery will continue beyond 2010, reported Angrisani Turnarounds, a New York consulting firm that advises underperforming businesses.

Just 18.4 percent of participants in Angrisani's Small Business Sentiment Survey said recovery will endure into 2011. Fourty-four percent predicted the recovery will last only through 2010, and 37.3 percent said economic revival won't even survive that long.

The statistics showed a reversal in sentiment among small-business owners. Optimism had grown steadily in the first four months of 2010.

Al Angrisani, founder and chief executive officer of Angrisani Turnarounds, said the results "track well" with recent gains in unemployment claims and slower-than-expected growth in the country's gross domestic product.

The downward trend could have implications for further economic revival: Business owners who expect a prolonged slump are less likely to expand, setting up a self-fulfilling prophecy that could mean sluggish job creation ahead.

"I believe this is one of the first warning signs that the economic recovery is slowing down," Angrisani said. "Clearly, small-business owners are signaling their lack of confidence in the sustainability of recovery. This is an important predictor of future hiring activity and the unemployment rate."

Local business owners said they're not any more optimistic about economic recovery than their counterparts in other regions, and they don't plan to hire in the near term.

Bette Leal, broker-owner of Century 21 Consolidated in Las Vegas, said business at her real estate company is half what it was before the recession. After stabilizing in recent months, she said, sales began to fall off again around May 15, as a federal tax credit for first-time home buyers ran out and a "lack of faith" in the Las Vegas economy persisted.

Leal said she has room for a couple of additional staffers, but she can't justify hiring given the taxes she'd shell out to bring workers on board.

"I don't see any pickup in the economy lasting, not when I look at what's happened with my payroll taxes and other taxes I have to pay," Leal said. "We don't have money to expand. I can't hire people when I'm paying another 20 percent to the state and federal government on top of salaries."

Just 13.9 percent of participants in May's Small Business Sentiment Survey said they planned to hire immediately, compared with 20.5 percent in April. And 14.4 percent said they expected major capital purchases in 2010, down from 20 percent a month earlier.

At Haig's Quality Printing in Las Vegas, employee counts have plummeted from 90 before the recession to 28 now. That's where the company will stay for the foreseeable future -- owner Haig Atamian said he has no plans to hire, and is contemplating more layoffs if conditions worsen.

"Every spot I can fill myself, I am doing them (the jobs)," he said. "We have taken it down as low as we can go, but if things drop any further, we are ready (to cut)."

Still, Haig said he's optimistic the worst has passed. His business has fallen to about 40 percent of where the company needs sales to be, but he doesn't expect added declines.

"I am kind of confident that it's going to stay stabilized. I think from here on, what little bit of business is left, everyone will be very aggressive on it. In our business, we have kind of come down to the core of what we do, and I am confident it will stay here and not drop any further."

The survey, conducted by research company Toluna, included 200 owners of businesses with fewer than 100 workers.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.

 

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