TRADE SECRETS

Uncertainty Clouds an Economic Recovery

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Hiring continued to improve in January, and we see the first month of salary growth in well over a year. Has the economy turned the corner? The data may say yes, but sentiment says no.

The first month in 2010 was the first in years that that both small business hiring and salaries are up, 0.8 percent and 0.1 percent respectively. Following the last few months of '09 that showed strong signs of improvement, it seems like the data would have a whole lot of people feeling positive. But business owners are far from it.

In fact, SurePayroll's optimism survey reveals one of our most pessimistic months ever, with more than half of business owners reporting that they feel pessimistic about the economy at this time.

So why does our technical data tell us business owners feel — and are acting — confident about the economy while our emotional data tells us they're not?

There is still huge uncertainty.

There is uncertainty about where health care will land. Will a bill get passed? Which version of the bill? Will it cost small businesses more or less?

There's uncertainty about the president's small business incentives. Will the community bank lending program impact small business growth? How quickly will tax incentives, and credits for investment and hiring have an effect? Is there enough stimuli? When will all of this get implemented?

And there's uncertainty about the stock market. Why have we seen the worst monthly decline since last February? Was optimism too high at the end of '09? Is the government getting too anti-business?

If people continue to feel uncertain, pessimism will grow and their actions will quickly catch up. But since most business owners have no control over the health care bill, the stimulus package or the stock market at this time, all you can do is focus on what you do have control over at this time - your business practices. Whether you're hiring or investing or downsizing and conserving, you need to take a stark, non-emotional look at your business and decide how you should feel'¦and then how you should be acting.

It's the business owners who did that last year and even two years ago that are still around this year.

Michael Alter

Michael is president of SurePayroll, America’s leading online payroll service. A nationally recognized spokesman on small business issues, Michael regularly appears on Bloomberg TV and other national business programs. He received an MBA from the Harvard Business School and holds a bachelor's degree in economics from Northwestern University. He resides with his family in the Chicago area.