According to ChiefExecutive.net, CEO confidence in business conditions has fallen to 5.28 on a scale from 1 to 10.
How does that compare over time? In February 2011, the confidence rate was at a high of 6.39. This means that it's fallen by 17.4 percent.
What should business leaders worry about? There are three things that are wrong with the economy.
1. Government debt is sky high.
According to Wall Street analysts, there are 10 signs that the economy might be headed toward a double-dip recession.
The US government debt is more than $14 trillion. And 42 states are spending more money than they take in. The Center of Budget and Policy Priorities reports that the budget shortfalls of state governments in the past three years totaled $430 billion.
USB Investment Research predicts that state and local governments will cut 450,000 jobs this year and next.
2. Unemployment is sky high.
In July 2000, the national unemployment rate was 4.1 percent. In July 2011, that rate is 9.2 percent. In California, unemployment is at 11.7 percent.
There are currently 14.1 million people in the United States without a job. To put this number in perspective, imagine that the entire populations of the following nine cities were out of work: Chicago, Houston, Phoenix, Philadelphia, San Antonio, San Diego, Dallas, San Jose, and Detroit.
What would be the economic impact if an economic stimulus package could put just 7 million Americans back to work? Assuming an average salary of $43,000 a year, their total earning power would amount to $310 billion. That would be the equivalent of the combined sales of these six industry giants: Dow Chemical, Metlife, BestBuy, UPS, Kraft Foods, and Lowe's.
3. Small business, America’s growth driver, has little access to credit.
In his testimony before the House Committee on Small Business on June 22, Tim Geithner, Secretary of the Treasury, said that lending has declined by a cumulative $4.2 trillion since Fall 2008. Over the same period, larger businesses were able to raise $3.6 trillion by issuing debt securities. While big business got 100 percent of the attention of the Treasury during the recession, small business has received very little consideration. House Small Business Committee Chairman Sam Graves (R-MO) said, "The key to America's long-term, sustainable economic recovery is held by flourishing small businesses – our nation’s number one job creators. But in order for small firms to grow and create jobs, they need access to adequate financing."
He further added that while the Treasury Department expedited the delivery of funds from TARP, the Treasury's Small Business Loan Fund has been held back, and for the past nine months not one lender has received funding. It seems that the recession that started in 2008 was caused by greed and the lack of a financial safety net, and the next recession might be caused by the lack of support of America's number one job creation engine: small business.
What's your take? What should sales leaders do to prepare for the next recession?
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