Durable Goods Orders Drop

Shoppers look at appliances at a Home Depot store in New York in this file image from December 23, 2009.

Image: REUTERS/Lucas Jackson/Files

If small businesses are generally gloomy, and the polls certainly show they are, news out of the Commerce Department that durable goods orders unexpectedly fell isn’t exactly going to pick up their spirits.

The Commerce Department reports that demand for big-ticket manufactured goods like appliances and cars dropped 1 percent in June, after a revised fall of .8 percent in May. That’s a bad sign that shows just how weak the economic recovery is, since durable goods orders are a leading indicator of economic activity.

Analysts polled by Reuters had expected an increase of 1 percent, almost the direct opposite of what happened.

Small business people, who are closest to the actual economy’s performance, have been pessimistic at least since June about the economy. In June, the National Federation of Independent Business monthly survey showed small business optimism dropping.

That kind of result has since been mirrored in a range of surveys of small businesses.

The Discover small-business watch released Monday shows a whopping 73 percent of small-business owners took home less pay in July, 58 percent rated the economy as poor, and 75 percent believe it’s likely or highly likely that the economy will slip into another recession, a belief that contradicts most economists, who believe a double-dip recession is unlikely.

But the 750 small-business owners surveyed for Discover by Rasmussen Reports were gloomier in July than they had been in June, and the poll’s confidence index reflects that, dropping to 83 in July from 86 in June.

A Wells Fargo/Gallup poll conducted in July showed a confidence index of negative-28, the lowest in the 29 quarters the bank has been conducting the poll.

President Barack Obama is trying to reverse those numbers, and the apparent economic slowdown they represent, by pushing for a range of initiatives aimed at juicing small business activity. He is scheduled to make an appearance in New Jersey today to push for Senate passage of a bill to provide $30 billion to small banks to be used to lend to small businesses.

He is also aiming to institute tax credits for small businesses.

And with numbers on the economy like today’s from the Commerce Department, small businesses are going to need all the help they can get.

"The number was weaker than expected and it could add to the idea that the economy is slipping into a double dip recession," Bruce Bittles, chief investment strategist at Robert W. Baird & Co. in Nashville, told Reuters.