Consumer confidence, the stock market, world events, the housing market and local political events are the significant factors impacting the entrepreneurial spirit.
As I look ahead, the future seems bright for small business and anything our policy makers can do to encourage this trend will be a key to job strength and stronger sales tax revenues moving forward.
Small business owners do expect better sales in 2014 and overall have a strong degree of confidence in their sales and hiring plans for 2014. The Wall Street Journal and Vistage International just completed a survey showing an uptick in 2013 small business sales results with an expectation that 2014 will be even better.
How does small business get those kinds of results?
They rely on consumer confidence. There is the national consumer confidence number, coming in at 78.1 percent in December. This is a strong number that I hope we can sustain in 2014. It would be great to see it higher, but conditions like a strong stock market can make it change quickly. I mentioned that the stock market is a key indicator of how people view the economy. As you all know, the recent reports of the stock market gains have been phenomenal.
Consumer confidence also has more regional tones that impact local investment decisions and consumer purchasing decisions. We now have good news from Boeing workers who did their part to keep jobs in Washington State by agreeing to a new contract. Retailers see a lot of sales tied to Boeing workers. A large number of other small businesses depend on Boeing as well. This is very good news for small business.
When the national unemployment rate is low, people also anticipate that more jobs will be available in the future, which helps them feel more confident. We need to keep our focus on job creation policies this year to keep people feeling good about the economy. We can argue over our tax load, but let’s be sure not to disrupt the trend of the improving economy. To a degree we need government to be stable in its agenda and not foist any more new rules or costs that create uncertainty for business planning.
While world events impact our sales, they are not causing Americans to worry about their economic stability right now. Even though the Middle East is still a mess, it isn’t that worrisome like it was when Europe and Greece were facing austerity measures. People got nervous about what it meant for this country and they held on to their money, not spending as much just in case they needed it.
We do have health care costs looming, but for the most part small businesses are exempt from this law. On Monday, the Chairman of the White House Council of Economic Advisers, Jason Furman, wrote an opinion piece in the Wall Street Journal that from 2010-2012 health spending grew at an annual rate of just 1.1 percent, the lowest rate in 50 years. Furman believes the slowdown is helping lower the deficits and helping to strengthen the job market. He also noted that prices for health care goods and services have risen at 1.8 percent since the ACA was signed into law in March 2010 and that is just .2 percent above the general price inflation.
I haven’t seen any formal projections yet for retail sales but I have read some early predictions that sales growth will be up by over 3 percent this year. While that might not sound impressive, the key is that it is up over last year. This is not a static number, but one that continues to show improvement in the economy.
I think that 2014 will be a growth year for small businesses and for retail sales. Let’s keep moving in this direction and encourage law makers to help by getting essential services in order and leaving the rest up to the private sector.
Jan Teague is the president/CEO of the Washington Retail Association. For more information, visit www.retailassociation.org.