Are Politics and Government Regulation Still Weighing on the Recovery?

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Small business optimism finished the year higher in December, but weakness in consumer spending shows the economic recovery is questionable at best. The National Federation of Independent Business, the leading non-profit small business association representing small and independent businesses, reported that its Small Business Optimism Index edged higher to 93.9 in December from 92.5 in November.

At the beginning of 2013, the index posted a reading of only 88.9. However, December’s reading is lower than three other readings during the year. Since the recession technically ended in 2009, the average value of the index is 91, which is eight points below the 35-year average.

“While there has been no sign that a real recovery has begun, we can be encouraged that the economy is at least crawling forward and not heading in reverse,” said NFIB Chief Economist Bill Dunkelberg. “Some segments of the economy are showing improvement (manufacturing, construction, professional services), but consumer spending, especially on services (70 percent of consumption), has lagged. Spending on items such as automobiles has certainly increased, however a corresponding rise in hiring has not yet materialized.”

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