U.S. Small-Business Owners Pull Back Capital Spending Plans | TigerDroppings.com

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Taxing Authority
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Houston
Member since Feb 2010
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U.S. Small-Business Owners Pull Back Capital Spending Plans


Net capital spending over the past 12 months declined to -22, down from -11 in July

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quote:

PRINCETON, NJ -- U.S. small-business owners' net capital spending intentions for the next 12 months plunged to -14 in November, the lowest level in more than two years, according to the Wells Fargo/Gallup Small Business Index. This is down from net capital spending intentions of -1 in July and suggests the nation's small-business owners are likely to pull back on their business investments even more, given their negative expectations for the next 12 months.

...

The -14 November score is based on 20% of small-business owners saying they expect to increase their capital spending over the next 12 months and 34% saying expecting to decrease their capital spending. The 20% "increase" reading is down from 23% in July and the lowest level since July 2010. The 34% "decrease" reading is the highest since July 2010. In the current survey, 45% of owners expect no change in their capital spending.

The current negative net capital spending intentions mark a significant shift from the positive double-digit scores seen prior to 2008.
Positive net spending intentions reflect how small-business owners usually expect to grow their businesses and take advantage of advancing technologies to help them do so. However, this has not been the case since the recession and financial crisis of 2008-2009, with net capital spending intentions reaching a low of -23 in November 2008. Small-business-owner capital spending expectations were slightly positive during the first two quarters of 2012, before turning neutral in July, and then plunging in November.



The November Wells Fargo/Gallup Small Business Index shows small-business owners are pessimistic about their future operating environment. Consistent with these negative expectations, owners' intentions are to reduce their capital spending plans and their hiring intentions over the months ahead.

Capital spending is by its nature relatively long-term. As a result, capital spending plans tend to be something business owners can defer when operating conditions are difficult. In the past, periods of significant weakness in the U.S. economy have been relatively brief -- meaning owners who delayed capital investments were able to catch up on their deferred capital spending projects relatively quickly.

This was not the case after the 2008-2009 recession and financial crisis.
I've been saying for years businesses are scared to spend on CAPEX. Obama's policies and hostility toward business owners isn't helping. Neither is the looming expenses associated with Obamacare.

Posted a similar survey last week.

Geez. It's like something happened in November to make business owners drastically more pessimistic? Wonder what it could be?



This post was edited on 12/13 at 12:01 pm



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Lsupimp
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Member since Nov 2003
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re: U.S. Small-Business Owners Pull Back Capital Spending Plans


We will move FORWARD without the reactionary Business Class.
Someday they will serve The State humbly and gratefully.






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CptBengal
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Member since Dec 2007
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re: U.S. Small-Business Owners Pull Back Capital Spending Plans


There will be calls for laws to make them spend that money.

THEY WILL CONFORM.






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buddhavista
Member since Jul 2012
3543 posts

re: U.S. Small-Business Owners Pull Back Capital Spending Plans


quote:

I've been saying for years businesses are scared to spend on CAPEX.

This has been a trend for the last 10 years in technology investments.

Businesses are loathe to make capital investments on IT items, and prefer to do them as OPEX. This is a big reason that they are moving to SaaS.

This started before obama but I think obama makes it worse.






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double d
Baylor Fan
Amarillo by morning
Member since Jun 2004
6720 posts

re: U.S. Small-Business Owners Pull Back Capital Spending Plans


quote:

This started before obama but I think obama makes it worse.


Ya think, duh. Forward!






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TROLA
LSU Fan
BATON ROUGE
Member since Apr 2004
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re: U.S. Small-Business Owners Pull Back Capital Spending Plans


It doesnt help when certain congressmen state that we should lengthen Depreciation to increase tax receipts and possibly dump special depreciation rules such as section 179...even going as far to call them loopholes..





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LSURussian
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Baton Rouge
Member since Feb 2005
80167 posts

re: U.S. Small-Business Owners Pull Back Capital Spending Plans


quote:

U.S. Small-Business Owners

They didn't build that!!!






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Taxing Authority
LSU Fan
Houston
Member since Feb 2010
22106 posts

re: U.S. Small-Business Owners Pull Back Capital Spending Plans


quote:

Businesses are loathe to make capital investments on IT items, and prefer to do them as OPEX.
One would almost always prefer to spend under an operational expense because of the favorable tax treatment. You can deduct the full amount of operational expenses immediately rather than doing over long term (depreciation).

With the expectation of rising tax rates, owning a (for tax purposes) depreciating asset is a super bad idea.






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buddhavista
Member since Jul 2012
3543 posts

re: U.S. Small-Business Owners Pull Back Capital Spending Plans


quote:

One would almost always prefer to spend under an operational expense because of the favorable tax treatment. You can deduct the full amount of operational expenses immediately rather than doing over long term (depreciation).

With the expectation of rising tax rates, owning a (for tax purposes) depreciating asset is a super bad idea.


yeah, but i have been doing this for 15 years, and I have noticed a very distinct pattern of businesses moving away from capex.

CFOs have tightened up on the budgeting process, and people just don't want to go through it. So they slip it in the operating budget.

in 2000, it was like - you need to buy some IT shit, go for it, I don't care
in 2003, it was like, it shit, well can you fill out this form?
in 2006, it was more along the lines of, well please create a business case
in 2009, yeah, how about no on that.
The nos have slowed but its a very rigorous review. And to avoid this, leaders do opex. the thing is that SaaS is a lot more expensive over the long term.






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ForeLSU
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The Corner of Sanity and Madness
Member since Sep 2003
33663 posts

re: U.S. Small-Business Owners Pull Back Capital Spending Plans


quote:

possibly dump special depreciation rules such as section 179...even going as far to call them loopholes..


I'll be loop-holing a new truck by the end of the year






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