News Column

Economic Uncertainty Clouds Hope Among Small Businesses

Nov. 26, 2012

Thomas Olson, The Pittsburgh Tribune-Review

empty office

Even a pop in sales from Small Business Saturday would not allay small companies' concerns about looming tax hikes and continued uncertainty about their operating climate, local business owners say.

Many in the Pittsburgh region are worried about possible tax increases in 2013, the health care cost burden from the Affordable Care Act and drastic federal spending cuts tied to the "fiscal cliff."

"Taxes are definitely a concern. It's going to affect all businesses," said Rick Murray of Rusmur Floors Carpet One Floor & Home in Bridgeville.

"When expenses go up, you have to find ways to reduce expenses. That's the tough part," said Murray, whose company has five showroom locations in the region and about 150 employees.

Now in its third year, Small Business Saturday is sponsored by American Express Co. and FedEx Corp., whose FedEx Ground unit is based in Moon Township. The small business day in 2011 drew more than 100 million shoppers to independent small businesses, according to American Express.

To support small businesses, FedEx gave away 40,000 Shop-Small American Express gift cards worth $25 each via Facebook. FedEx also made available to independent retailers posters promoting Small Business Saturday that could be printed for free at FedEx Office Print & Ship Center locations.

This year, the average holiday shopper will spend an estimated $751 on gifts, decorations and other holiday purchases, according to the National Retail Federation. How much of that winds up in the pockets of small-business owners is hard to estimate.

The NRF does not track sales specifically to small retailers but notes that 95 percent of the nation's retailers are independent companies with one location.

For many small businesses, holiday sales can represent nearly 20 percent of annual sales, according to industry estimates.

The elections hardly changed the Republican/Democrat balance in the House and Senate, "and there's so much divisiveness in Washington that we still have no certainty at all," said Mark Shelleby, treasurer of Vista Metals Inc. in McKeesport, which makes tungsten carbide forms for manufacturing consumer and industrial products.

"The only certainty we do have is that to avoid the fiscal cliff, Congress will impose higher taxes in one shape or another, which leaves you with a flat order book," said Shelleby. He is also vice chairman of SMC Business Councils, a Churchill-based trade group that represents about 1,500 Pennsylvania small businesses.

Under the fiscal cliff, the 2011 law aimed at balancing the federal budget, more than $500 billion in tax increases and spending cuts would occur in 2013, starting in January. That includes the expiration of the Bush tax cuts on Dec. 31, which would bring higher federal income taxes and capital gains taxes, higher estate taxes and a resumption of the federal payroll tax that funds Social Security.

Shelleby worries that drastic federal spending cuts, especially a more than 9 percent reduction in defense spending, will "trickle its way through the economy" because it will particularly hurt manufacturers that supply components for vehicles, aircraft and the like.

"Everything is on hold from a capital standpoint, and it will be on hold until we get more clarity," said Shelleby of Vista Metals' plans. He added that the company would also be "out of a hiring mode" for now.

Thomas Olson is a staff writer for Trib Total Media.


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Source: (c)2012 The Pittsburgh Tribune-Review (Greensburg, Pa.) Distributed by MCT Information Services


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