Friday, June 24, 2016

Election Uncertainty Takes Toll on Business: About one-third of small firms’ owners report negative impact, according to survey

By Ruth Simon of the WSJ. Excerpts:
"the uncertainty that many small-business owners say is weighing on their operations.

Roughly one-third of 715 small-business owners surveyed in June by The Wall Street Journal and Vistage Worldwide Inc. said that uncertainty related to the November presidential election is having a negative impact on their business. Firms have reported delaying hiring, putting off investments or reducing new equipment orders."

"Overall business investment has already slowed. Nonresidential fixed investment has fallen for the last two consecutive quarters, according to the Commerce Department, the first back-to-back quarterly drops since 2009.

Companies typically pull back on capital investment and hiring ahead of an election, while consumers scale back purchases of durable goods and higher-priced items, said Brandon Julio, an assistant professor of finance at the University of Oregon Lundquist College of Business. Small businesses are more likely to be skittish because they face a higher cost of capital than larger firms and often have more trouble recovering from mistakes, he said."

"Overall, small-business confidence in June fell to its lowest level since November 2012, reversing all of the gains of the previous three months, according to the WSJ-Vistage Survey."

"Some big companies are also pointing to political uncertainty as a drag on business. High-end retailers Neiman Marcus Group Inc. and Tiffany & Co. have in recent months cited the presidential election as weighing on their shoppers."

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