“Personal Finance: Only buyers will drive more hiring - Philadelphia Daily News” plus 1 more

Personal Finance: Only buyers will drive more hiring - Philadelphia Daily News

Posted: 30 Aug 2010 12:07 AM PDT

Posted on Sun, Aug. 29, 2010

What's stopping small businesses from hiring?

One popular story line of the recession is that small businesses, which employ about half the workforce, are afraid to hire because they don't know what health-care reform and tax changes will mean. Based on that narrative, some stock market observers predict that the November election will be a turning point - erasing uncertainty about politics and at last freeing the stock market to climb.

But analysts who have delved into business decision-making are shooting holes in that assertion. They see a simpler truth.

Unless companies see customers showing up in greater numbers, hiring is not going to materialize, said J.P. Morgan Securities Inc. economist Gabriel de Kock.

"A shift in the balance of power after the November congressional elections will have a very modest sustained positive impact on economic growth and job creation, unless such a shift drives policy change that directly boosts aggregate demand," he said. "By the same token, while risk markets could bounce after the election, any broad-based gains may be short-lived."

Demand is the driving force

To test the assertion that taxes and other political factors are weighing down employment decisions, de Kock analyzed surveys of small-business owners by the National Federation of Independent Business the last 37 years.

"The results are unambiguous," de Kock said. "They overwhelmingly indicate that weak demand, rather than government policies, accounts for firms' reluctance to expand."

That has been true historically and recently. As he dug into small-business sentiment since 2005, he found that taxes and regulation drove only 12 percent of the reluctance of small-business owners to expand, while weak demand accounted for 87 percent.

In other words, to use a slogan from the Clinton-Bush election, de Kock concluded: "It's the economy, stupid! And only about (one-sixth) is: It's Washington, stupid."

That leaves scant hope for a quick uptick in hiring.

According to de Kock's research, small businesses respond primarily to the economy when deciding whether to buy equipment such as computers or hire employees.

Jacques Eddy, a Heartland Payment Systems Inc. manager who advises restaurants and other small businesses, said that "what stops business from hiring is sales. If they think they can move to the next level and get more business by hiring, they will do it."

Most, he said, have been using incentives to attract customers and are not hiring yet.

One firm that hired

Still, Ashley Bolivar, sole proprietor of Magnetic Marketing Solutions in Chicago, recently hired the first two employees for his Web-development business.

"I was scared to death to hire help in this economy," he said. "But since the business growth was there, I did it."

Despite recent concerns about the economy, Morgan Stanley economists David Cho and Richard Berner say more companies appear to be willing to spend on new equipment than on new employees. In a recent survey of analysts, the firm found that 39 percent think companies will boost fixed investment over the next three months and one-quarter expect payrolls to expand.

Only 5 percent said uncertainty over health care made companies reluctant to hire. About 20 percent said uncertainty over taxes was prompting managers to hesitate on any expansion.

Larger concerns for the businesses included stock market volatility, finding potential employees with the skills needed, and fear that investors would sell the stock if companies expanded.

Cho and Berner said in a report: About a third of the companies that had announced expansions took a hit on their stock prices as investors sold shares.

"Investors want managers to be disciplined stewards of their capital and will punish undisciplined corporate behavior," the economists said.

Gail MarksJarvis is a personal-finance columnist for the Chicago Tribune. E-mail her at gmarksjarvis@tribune.com.

This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php
Five Filters featured article: "Peace Envoy" Blair Gets an Easy Ride in the Independent.

TheStreet And Bundle Team Up To Share Content And Audiences Across Their ... - Street.Com

Posted: 30 Aug 2010 06:41 AM PDT

TheStreet.com, Inc. (Nasdaq: TSCM ( TheStreet.com)), a leading digital financial media company, and Bundle, the new socially informed money management website funded by Citigroup, Microsoft and Morningstar, announced today a content and audience-sharing agreement whereby TheStreet and its sister Web site MainStreet will provide personal finance editorial content and multimedia tools to Bundle.

As part of the agreement, TheStreet will gain access to Bundle's original content and community, which focuses on a real-time and data-driven approach to sharing and learning about consumer behavior. The agreement also provides that TheStreet content may be distributed through other online channels owned or controlled by Bundle's investors and strategic business partners, including the MSN Money website. Finally, the companies will share audiences through a series of cross-promotional efforts on each other's respective sites. "What attracted us to Bundle is their revolutionary user interface, approach to social media and access to unique behavioral consumer data," said Daryl Otte, CEO of TheStreet. "We firmly believe, as does Bundle, that personal finance spending and investing recommendations don't exist in a vacuum. With access to Bundle's great data tools and approach to social media, and guided by our action-oriented, professionally created content, our readers and Bundle users will have the best possible resources for managing their financial lives. They can learn from professionals, put their financial lives and goals into a real-world context and then compare their habits to peers within their community. This type of powerful actionable insight is an important element of TheStreet's reporting across our network and, as such, our personal finance content dovetails nicely with Bundle's efforts in delivering leading edge personal financial management tools to the web community. We are extremely pleased to be joining forces with Bundle and are proud to have been selected as its first and primary third-party personal finance content partner, a validation to the strength of our reporting, analysis and commentary and how well it resonates with readers."

Personal Finance

Tuesday, August 31, 2010