Small Businesses Not Partaking in the Q1 Rally
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What is the main topic discussed in this episode?
With your money briefing, I'm J.R. Whalen at The Wall Street Journal in New York.
Why are small businesses not joining the Q1 stock market rally?
It's been a party of sorts on Wall Street with stocks rallying since the first of the year, but small businesses are not in the mood to party. How down are they? We'll explain in a moment. First, these money and market stories you should know.
How are recent mortgage and Treasury rate moves described and why do they matter to small businesses?
Freddie Mac says the 30-year fixed-rate mortgage averaged 4.46% in the week of January 31st. That was up just one basis point compared to the prior week. It was the first time this year the popular mortgage product saw an increase. But economists expect mortgage rates to come down in the next several weeks. That's because they expect the pace of economic growth to slow. Now, for all you fans of technical economic jargon out there, it means that interest among investors in bonds has increased substantially. That's sent yields down again, including the longer end of the Treasury yield curve that more directly impacts mortgage rates. And Atlanta's Hartsfield International Airport was no doubt one of the country's busiest.
What does the Wall Street Journal survey reveal about small business optimism in January?
in the past couple of days, handling traffic to and from the Super Bowl. But the FAA says that Chicago's O'Hare International Airport took the crown as the busiest U.S. airport for 2018. O'Hare had more than 903,000 arrivals and departures during last year. Atlanta's Hartsfield was second with more than 895,000 arrivals and departures.
How did the government shutdown and policy uncertainty affect small business sentiment?
It was the first time in four years O'Hare took the top spot from Hartsfield.
The stock market has enjoyed a broad recovery since the start of the year, but small businesses have not shared in the joy. In fact, confidence among small businesses reached its lowest level in January since President Trump was elected.
What real-world examples illustrate small business caution in ordering and spending?
And Wall Street Journal reporter Ruth Simon is here with some details for us. So, Ruth, there's quite a bit of pessimism economically among small business owners.
Small businesses have become less optimistic about the economy as a whole. Small business optimism has been going down for much of the past year. For the first time, we saw in this January survey some concern about how small businesses feel about their own prospects, and they're becoming a little more cautious now.
The survey of small businesses taken for the Wall Street Journal occurred during the government shutdown.
How are small businesses' ties to consumer and corporate customers shaping their outlook?
So that may have contributed to some of the pessimism, but the threat of another stoppage is real. That has to be very unsettling.
I think there's a lot of economic uncertainty for small firms, both with the government shutdown, what's going to happen with tariffs. The stock market has been volatile. There's been a question about how much interest rates will increase. So they are operating in an uncertain world. And some of the businesses I talk to, they just say when they look at their own book of orders, they see some uncertainty as well.
Listeners who check out your story on WSJ.com or the WSJ app will see a photo of the New Orleans haberdashery called Rubenstein's, and the owner there said that sales were strong, but he's leery about the months ahead.
Yes, he sort of finds himself on the fence, I'd say. Half of him is optimistic and half of him is nervous. So when I talked to him, Kenny Rubenstein had just put in his orders for the fall season. And when he looked at his own internal records, there was a certain number. He bought 75% of that number. He just felt he should be a little cautious. And if business is really strong, he can fill in at the end of the year. Now, he had a very good year last year, but he's just a little nervous.
You know, we saw numbers from the Federal Reserve saying that the appetite for risk among businesses to seek out loans came down in the fourth quarter. And small businesses have more of a direct pipeline, it seems, to consumer confidence in people's wallets than a large corporation. They're very much tied to how unstable or inconsistent information might affect consumers.
And there are also some of them deal with corporate customers as well, and they're on the receiving end of things that corporations are doing.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:09
2
Why are small businesses not joining the Q1 stock market rally?
0:09–0:22
3
How are recent mortgage and Treasury rate moves described and why do they matter to small businesses?
0:22–1:04
4
What does the Wall Street Journal survey reveal about small business optimism in January?
1:04–1:28
5
How did the government shutdown and policy uncertainty affect small business sentiment?
1:28–1:53
6
What real-world examples illustrate small business caution in ordering and spending?
1:53–2:28
7
How are small businesses' ties to consumer and corporate customers shaping their outlook?
2:28–4:50
Speakers
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