SMALL BUSINESSES BRACE FOR CLIFF DIVING
President Obama and Republican Mitt Romney dueled Wednesday night over which candidate had a better plan to grow the economy and create jobs. But companies large and small are continuing to hold back on hiring new employees because of uncertainty over government tax and spending policies.
A recent U.S. Chamber of Commerce third quarter survey, reported in The Hill, shows that 84 percent of small business owners say they don’t plan to hire additional employees for the remainder of the year. "Continued uncertainty is the greatest threat to small businesses and our country’s economic recovery," said Thomas Donohue, president and chief executive of the U.S. Chamber.
The same reticence to hire is true for large companies. “With the exception of retailers and restaurants which are expected to add about 425,000 temporary workers to deal with holiday trade, CEOs of big U.S. companies don’t appear to be in the mood to do a lot of hiring,” The Wall Street Journal’s Joseph White reports.
And J.P. Morgan estimates that 61 percent of its American clients hiring plans have been adversely affected by the fiscal cliff according to The Economist. “That is one reason why unemployment is so high. Durable-goods orders plunged 13.2 percent in August, partly because companies are too scared to invest their cash mountains to expand production.”
STOCKS TO AVOID IN CASE OF A CRISIS If Congress fails to strike a deal with the administration before the end of the year, the stock market, which is currently humming along could be headed for an unpleasant correction. If that happens, then three sectors will be hit hardest. Money Morning’s Jonathan Yates reports that the defense industry, housing and finance are stocks to steer clear of if the country spirals over the fiscal cliff. Read more at Money Morning
DIVERSITY, DIVERSITY, DIVERSITY Companies that are heavily reliant on government sales are looking for other ways to make their money before automatic cuts to government spending take effect next year. VisSat Inc, a wireless communications provider mainly specializing in defense communications, is shifting its focus to satellite-based high-speed internet services instead of relying so much on government contracts. Reuters’ Garima Goel and Sagarika Jaisinghani report, “ViaSat is trying to break its reliance on U.S. government sales – which currently make up almost half of its revenue.” Read more at Reuters
PREPARING FOR THE WORST Fortune Magazine’s Stephen Gandel reports that Mohammed El-Erian, CEO of PIMCO, a major asset manager, believes the country will lapse back into a recession and has mapped out a contingency plan for what to do with its clients’ money in that case. Read more at Fortune
STARBUCKS CEO: D.C. NOT SERVING UP SOLUTIONS After Wednesday night’s debate in Colorado, Starbucks CEO Howard Schultz told CNBC’s Javier David that leaders in Washington aren’t doing enough for businesses during looming economic uncertainty. “We’re facing the fiscal cliff, the debt ceiling debacle that we saw a year ago is still hanging over the country… We have serious problems,” Schultz said. “Unfortunately, we’re not seeing the level of civility or respect that we need.” Read more at CNBC
