This Week's Economic Roundup
Amid ongoing declines in the housing market and growing uncertainties over employment, small-business owners are getting more worried about the economy. Here's a look at this week's economic developments and how they may affect your business.
Small Business Outlook Drops
The economic outlook of small-business owners declined sharply in June, with many doubting that conditions would improve in the months ahead, Discover reported on Monday.
Its monthly small-business confidence index dropped seven points to 102.5, the lowest level since being launched August 2006. In June, only 34 percent of 1,000 small-business owners surveyed nationwide said they felt conditions for their business were getting better, down from 43 percent in May. At the same time, just 38 percent described the economy as "excellent" or "good," down from 45 percent, with more owners planning to cut back on spending.
In a more positive trend, cash-flow concerns reported by about half of the owners surveyed last month remained steady in June. An uninterrupted cash flow suggests market conditions aren't getting any worse, according to Sastry Rachakonda, the director of Discover's small-business credit card.
Consumer Confidence Down
After rebounding in May, confidence among the nation's consumers retreated again in June with a mixed outlook on the labor market, the Conference Board reported Tuesday.
Based on a survey of 5,000 households, the private research group's consumer confidence index dropped to 103.9 from 108.5 in May. While those expecting more jobs in the months rose to 14 percent from 13.6 percent, those expecting fewer jobs rose to 17 percent from 15.6 percent, the report said.
"A perceived softening in present-day business and employment conditions are the major reasons behind this month's pull-back," Lynn Franco, the group's director of consumer research, said in a statement. Franco said consumer remained subdued about short-term economic prospects.
Housing Woes Continue
Tighter credit for subprime loans dragged existing home sales down by 0.3 percent in May to an adjusted annual rate of 5.99 million units, 10.3 percent below the same period last year, the National Association of Realtors reported Monday.
The national median price for existing homes of all types was $223,700, down 2.1 percent over the past year.
"It appears some buyers are simply waiting for more signs of stability before they get serious about getting into the market," Lawrence Yun, the trade group's senior economist, said in a statement.
At the same time, new home sales were down 1.6 percent from April to an adjusted annual rate of 915,000, 15.8 percent below May 2006, the Commerce Department reported Tuesday.
The median selling price for new homes in May was $236,100, with 536,000 newly built houses left on the market at the end of the month, the report said.
Durable Goods Orders Plunge
Driven by sharp declines in demand for new aircrafts, orders for durable goods dropped by 2.8 percent in May to $213 billion, the Commerce Department reported Wednesday.
The declines followed three straight months of gains.
As a result, inventories of manufactured durable goods rose 0.2 percent to a record-high $313.2 billion, the report said.
Gas Prices Down
Average gas prices fell for the fifth straight week, dropping 2.7 cents to $2.982 per gallon as of June 25, the Energy Information Administration reported Wednesday.
Gas prices remain 11.3 cents higher than the same period last year. Prices were down in every region, including a 4.4 cent decline in California to $319.2 per gallon.
Jobless Claims Fall
The number of new claims for unemployment benefits fell by 13,000 to 313,000 in the week ending June 23, the Labor Department reported Thursday.
The advance seasonally adjusted insured unemployment rate for the previous week was unchanged at 1.9 percent, with some 2.49 million people filing claims, the report said.
The largest decreases in new claims last week were in Illinois, Georgia, and New York, while the largest increases were in Pennsylvania, Wisconsin, and New Jersey.