With Washington metropolitan area businesses bracing today for yet another round of serious wind and rain storms, we’re pleased to see that the House tomorrow will take up the Disaster Loan Fairness Act of 2012 ( HR 6296) introduced by Rep. Lou Barletta(R-PA). The legislation would lower the interest rates on Small Business Administration disaster loans and make the program simpler and more transparent.

This measure is welcomed news to the thousands of small businesses that have—or will—sustain losses because of natural disasters. And there have been many.  According to Rep. Barletta, since January 2011, over 200 congressional districts have been impacted by a major disaster declared by the president. Communities in almost every state in this country have been flooded by a tropical storm or a hurricane, burned by a wildfire, crippled by a snowstorm, or destroyed by a tornado. Let’s hope no one suffers damage from today’s series of storms and rest assured that, if disaster does strike, businesses will be able to obtain the financial resources to rebuild.

The National Federation of Independent Business said that small business owner confidence was virtually unchanged in May. The Small Business Optimism Index edged slightly lower from 94.5 in April to 94.4 in May. The longer-term trend is more positive, as the index stood at 90.9 at this point last year. Still, small businesses remain concerned about the economy, with the index well-below the threshold of 100 which would suggest growth for the sector.

The net percentage of respondents saying that the next three months are a “good time to expand” was also unchanged at 7 percent, where it has stood for three consecutive months. For those saying that it was not a good time for expansion, the economy was the top concern, with political uncertainty also a factor. With that said, last month “poor sales” dropped from being the top concern for the first time since 2008 to second place. This top concern this month is “taxes,” perhaps a recognition of the expiration of tax cuts at the beginning of 2013. After taxes, the top concerns were sales and the regulatory environment.

The data points behind the index were mostly mixed. Expectations of sales, earnings and capital spending were lower. In contrast, it appears that small business owners are stepping up their hiring, with employment and job openings measures showing increases. Credit conditions remain an ongoing concern.

Chad Moutray is chief economist, National Association of Manufacturers.

The National Federation of Independent Business said that small business owner confidence was slightly higher in February. The Small Business Optimism Index rose from 93.9 in January to 94.3 in February. This was the sixth consecutive month that the index increased, with a steady improvement from the 88.1 reading of August. It is worth noting, though, that small business sentiment remains sub-par. The small business sector has historically expanded when the index exceeds 100 – a level that it has not seen since April 2006.

The net percentage of respondents saying that the next three months are a “good time to expand” fell from 9 percent to 8 percent. For the most part, small business owners remain anxious about the economic and political environment, as indicated by the reasons cited for their response on the expansion question. While many of the indicators in this survey have improved of late, it seems that progress has been slow, with owner anxieties playing a large role.

Since the beginning of the recession, “poor sales” – a proxy for the economy – have been cited as the “single most important problem.” In this survey, it still is, but the percentage stating this has been falling. It is now the most important problem for 22 percent of the respondents, down from 28 percent one year ago and 34 percent at its peak.  Right on its heels are “taxes” and “government regulations and red tape,” both with 21 percent each.

Improvements in the Small Business Optimism Index (and the “poor sales” figure) can be tied to increased confidence in many of the indicators. For instance, measures for expected sales, current job openings, expected compensation and inventory growth were all higher in February. Yet, many of the indicators remain weak, reflecting continued caution among many small business owners. For instance, fewer owners plan to increase employment this month, and credit conditions remain an ongoing concern.

Manufacturing is gaining some additional attention in Kentucky. Recently Louisville Mayor Greg Fischer and Lexington Mayor Jim Gray have undertaken a regional initiative to help improve the competitiveness of advanced manufacturing in both cities.

Member of the National Association of Manufacturers Board of Directors and President of Atlas Machine & Supply in Louisville, Rich Gimmel will be hosting Mayor Fischer next week to further discuss this initiative. Mr. Gimmel is hopeful that the local leaders are serious and is happy they are talking about manufacturing.

Read Mr. Gimmel’s comments to the Louisville-Courier Journal:

“As a manufacturer who depends on other manufactures as customers, and as a board member of the National Assn. of Manufacturers, I’m delighted that community leadership is once again putting manufacturers on their economic development radar screen.  For the past several years, most of the emphasis was on “corporate HQ’s” and service or medical jobs.”

Despite some progress in overall economic conditions since the recess, small business owners remain anxious about the economy. These concerns have had real impacts on the smaller firms’ willingness to invest in their businesses, hire additional workers, or seek additional capital.

Given that smaller businesses have traditionally led economic growth coming out of a recession, the fact that this is not happening this time around is hampering employment and economic growth. Two recent surveys have highlighted this fact.

First, the U.S. Chamber of Commerce conducted it’s annual Small Business Outlook Survey. Nearly half of small businesses, defined as those with under $25 million in annual sales, felt that economic uncertainty was their top concern. Other top challenges included fiscal efforts to address the federal deficit and debt, government regulations and the Health Care law.

In addition, 64 percent intended to keep the same number of employees over the next year, with 19 percent planning additional hiring. Interestingly, despite negative views on the national economy, almost two-third report that their own businesses are “on the right track.”

Earlier today, the National Federation of Independent Business released its Small Business Optimism Index, which fell from 90.9 in May to 90.8 in June. While virtually the same as the previous month, the index reflects continued wariness on the part of small business owners. Over half of the respondents who suggested that the next six months were not a good time to expand, said that economic conditions were the reason. The top concern remains “poor sales.”

Chad Moutray is chief economist, National Association of Manufacturers.

The clock is ticking. Lawmakers have less than a month before the August 2 deadline to raise the debt ceiling, and we’re just days away from the President’s July 22 target date for a deal.

What happens in the coming days will have significant impact on the country’s economic future. With the stakes so high, almost 500 business organizations today sent a letter to the White House and the Capitol urging policymakers to reach a fiscally responsible agreement.

From the letter:

[I]t is critical that the US government not default in any way on its fiscal obligations. A great nation – like a great company – has to be relied upon to pay its debts when they become due. This is a Main Street not Wall Street issue. Treasury securities influence the cost of financing not just for companies but more importantly for mortgages, auto loans, credit cards and student debt. A default would risk both disarray in those markets and a host of unintended consequences. The debt ceiling trigger does offer a needed catalyst for serious negotiations on budget discipline but avoiding even a technical default is essential. This is a risk our country must not take.

The letter also calls on lawmakers to take steps to stabilize our $14 trillion-dollar debt and rein in deficit spending.  Lawmakers will have to make difficult choices, but they should not sacrifice economic growth by raising taxes on job creators.  NAM President and CEO Jay Timmons made that point recently, saying,

Manufacturers are urging our elected officials to work together to bring down our federal deficit by taking a hard look at government programs and making difficult     decisions to cut spending, especially in the entitlement area, without increasing the tax   burden on manufacturing or any individual manufacturing sector.

Americans are concerned about the nation’s unsustainable debt and anemic job growth.  Congress and the President can address both issues in the debt ceiling negotiations by making difficult decisions to cut spending and reform government programs and rejecting tax increases that would stifle job creation.

The Senate Finance Committee held a hearing on the U.S.-Panama Free Trade Agreement this morning.  Watch the hearing here.

The Committee heard testimony from NAM member Jason Speer, vice president and general manager of Quality Float Works.  Jason had just returned from Panama, so he was able to offer a particularly informed perspective about what the trade agreement would mean for manufacturers.

Jason also spoke with the NAM while he was in Washington:

Rep. Paul Ryan (R-WI) appeared on Face the Nation on Sunday, making a basic point about tax rates and the President’s renewed call for higher taxes.

If you have really high tax rates what you end up doing is you penalize small businesses. What you have to remember Bob, most successful small businesses file their taxes as individuals. Most of our jobs come from these small businesses. The president is proposing to raise the top tax rate on these small businesses to 44.8 percent. We don’t think that’s good for jobs, we don’t think that’s good for economic growth, and when we tax our employers a whole lot more than our foreign competitors tax theirs, we lose, they win, and we don’t want that.

Two things, number one: We don’t have a tax problem. Our revenues are going back to where they have been historically. We have a big spending problem…The president’s proposing $1.5 trillion in tax increases, the Democrats in congress are proposing anywhere from $2-16 trillion in tax increases based on the three budgets they brought to the floor the other day…Here’s what we’re trying to get: Spending cuts and controls to get spending under control — because that’s the problem — and economic growth and job creation. We don’t want to give up one to get the other.”

Via The Corner, National Review Online.

Searching for the word “manufacturing” in Thursday’s House floor debate on H.R. 1473, the continuing resolution, that passed by a vote of 260-167, we find first the section that eliminates funding for White House “czars.”

Sec. 2262. None of the funds made available by this division may be used to pay the salaries and expenses for the following positions:

(1) Director, White House Office of Health Reform.

(2) Assistant to the President for Energy and Climate Change.

(3) Senior Advisor to the Secretary of the Treasury assigned to the Presidential Task Force on the Auto Industry and Senior Counselor for Manufacturing Policy.

(4) White House Director of Urban Affairs.

The Detroit Free Press observes, “In the case of the car czar — actually the senior advisor to the secretary of the Treasury assigned to the Presidential Task Force on the Auto Industry and senior counselor for manufacturing policy — it hardly matters: Ron Bloom, who held the job, moved to the National Economic Council earlier this year, so it’s vacant.”

On another topic, Rep. Chakah Fattah (D-PA) complimented Rep. Frank Wolf (R-VA), who chairs the Commerce, Science, Justice activities in the continuing resolution. From Congressinal Record, Page H2742:

Notwithstanding the very challenging fiscal circumstances, Chairman Wolf has worked towards a set of priorities that will help move our country forward, and I thank him for working with me on a bipartisan basis.

I want to point out our highest priority within that section of the Commerce Department, which is that of the Manufacturing and Extension Partnerships, which will see an increase above the 2010 enacted and also the Senate amendment, or H.R. 1. I am very pleased about that.

The Manufacturing Extension Partnership (MEP) operates out of the National Institute for Standards and Technology, working with state partnerships to provide business planning services and technical advice to small businesses. (continue reading…)

• In Iowa, Gov. Terry Branstad will moderate a forum on manufacturing for Republican presidential can
  

  Gov. Terry Branstad

  didates in Pella on Nov. 1. The National Association of Manufacturers and Vermeer Corp. are sponsoring the forum, which will be held at Vermeer’s headquarters. (NAM news release.)
  Mary Andringa is president of Vermeer and chairman of the board of the National Association of Manufacturers. From IowaPolitics.com:

“Manufacturing is vital to the American economy, and we expect issues that affect manufacturers – from tax reform to energy security to job growth – to play a central role in the presidential election,” Andringa said. “We look forward to welcoming the candidates to Vermeer and learning about their visions for keeping manufacturing in America strong.”

• The NAM’s new chief economist, Chad Moutray, posted his first blog post at Shopfloor on Thursday, “Producer Prices Increase in March.” Chad  is former chief economist and director of economic research for the Small Business Administration’s (SBA) Office of Advocacy, an enclave of good sense in the federal government that produces valuable analysis such as the 2008 report, “The Impact of Regulatory Costs on Small Firms.

• There’s more to the McClatchy Newspapers’ article than the shocking headline would let on, “No easy solutions for U.S. deficit.” (Next: “Economy poses problems.”) The story analyzes the tax elements of the deficit-reduction debate, i.e., when is a loophole really a special-interest tax break versus sound economic policy. And how is that both House Budget Committee Chairman Paul Ryan and President Obama can both support a top corporate tax rate of 25 percent?

“‘It’s easy for business in general to rally around a 25 percent rate, or a lower rate, but when you get to (tax) base broadening, that’s where it’s going to be very tricky,’ said Dorothy Coleman, vice president of tax policy for the influential National Association of Manufacturers.”