http://money.cnn.com/2013/02/21/smallbusiness/walmart-small-business/index.html?iid=SF_E_River
As taxes and gas prices are increasing, consumers are tightening their wallets. However, that is not the end of it. Small firms have also become more cautious about how much they're buying at Sam's Club, according to Wal-Mart. It has been reported that small businesses have been spending less freely lately because they're concerned about gas prices, taxes and the economy. When consumers tighten their wallets, small businesses often follow suit. Business owners are worried about the state of consumer spending and health-care costs. And the economy doesn't improve and business isn't picking up, business owners will no longer be able to afford supplies and other purchases.
4 comments:
My fiancé’s family runs two small businesses in my home town. I have been able to see firsthand how this recession is hurting our town and the businesses in it. With decreasing sales and increasing gas prices (one is a pizza shop mainly relying on deliveries), they are forced to buy less or cheaper supplies for the businesses, which can in turn lower sales further. It is a vicious cycle.
To me, this makes a lot of sense. I think that consumers on an indivudal basis, and small business spending would be highly correlated. Why? Because they are the same people. Healthcare costs are rising, and the incentives for opening your own business have slightly diminished, that is, the cost of doing so has risen.
It is true the economy has seen rising gas prices as well as commodity prices like meat as well as grain. Add to this the fact that consumer confidence is down which is keeping consumption down and it is not hard to imagine that businesses are struggling. Hopefully these conditions will reverse themselves so that small businesses can feel some relief in the coming days.
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