The Economist blogs on a cautionary report (pdf), a compendium of surveys really, from The National Federation of Independent Business (NFIB). Briefly, despite a small upturn in the economy, NFIB finds that small business owners are not optimistic:

Warning signs

But the real trouble comes in examining the individual indicators. In particular, the February index showed a major shift in small business outlook, where in January slightly more owners expected conditions six months ahead to be better than they currently are, many more now say that conditions will be worse. Sales expectations, expansion plans, and perceptions of credit conditions also worsened. And while deterioration in hiring slowed, small business owners were still cutting jobs on net in February, according to the NFIB survey.

It's not a pretty picture. And owners continued to report that their single-most important problem, by far, is low sales levels (rather than taxes, interest rates, or labour quality). That's worth keeping in mind as conservatives increase the volume at which they argue that high unemployment is due to extensions of government unemployment benefits. The problem is clearly not labour supply. Rather, the economy's principal job creators are seeing too little demand to justify increases in hiring. That's the drag on recovery.

California seems to be the epicenter of the recession, and the San Diego Union Tribune also notes the jitters.

Pessimism up at small businesses

The fallback in confidence is occurring even as the economy seems to have bottomed out, with retail sales picking up nationwide and an increasing number of small businesses preparing to add workers.

"News about the economy is for the most part improving and therefore is an unlikely source of small-business uncertainty and declining optimism," said William Dunkelberg, the federation's chief economist. Instead, he said, small businesses are more skeptical of how politicians are handling the economy.

...

Alex DeNoble, chairman of the management department at San Diego State University's College of Business Administration, said he's not surprised by the foul mood among small businesses.

"Small businesses are seeing big banks getting bailed out and they're not getting the same help and don't have access to capital," DeNoble said. "And small businesses that rely on consumers buying their products with discretionary dollars are in a fix because consumer spending is tight. There's a lot of competition out there and the cost of keeping the doors open is very high. That doesn't make for a happy environment."

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Troy Reif, who heads Tre Electric, an electrical contracting shop in El Cajon, said he is "not feeling real confident" about the future despite that business seems to be improving, thanks to a recent wave of tenant improvements at rental properties. Over the past month or two, business has picked up enough for Reif's 15-person firm that he hired back three employees who had been laid off.

Reif said the main reason for his lack of confidence is that he fears that government spending is out of control in Washington.

"They're plowing ahead with programs even when they don't have money to do so," he said.

So small businessmen variously blame government policies, government bailing out the rich, and government spending. But that's all small beer, because the Wall Street Journal is bullish: 10 Best Places for Second Homes

At long last, the market for luxury real estate is coming back to life.

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There's nothing like a stabilized economy and a huge rebound in stocks to send folks looking for the perfect manse. The return of hefty Wall Street bonuses hasn't hurt, either.

With all that in mind, and with summer just around the corner, Barron's sized up the market for upscale second homes, one of the greatest luxuries of all. We scoped out dozens of deluxe enclaves across the country, speaking with brokers, homeowners and others.

Originally posted here.