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What Economic Indicators Really Matter To Small Business Owners? January 05, 2022 (0 comments)
New York, NY—Does economic data help a small business owner such as a retail jeweler make better business decisions?
There’s no shortage of economic data, but more importantly, no shortage of ways to spin it. In this article in Inc.magazine, financial analyst George Pearkes of Bespoke Investment Group, points out that economic data can be presented from a perspective motivated by an ideological or commercial agenda.
Take, for instance, an analyst who warns luxury shoppers are planning to scale back spending. “A quarter of respondents to a survey of affluent consumers plan to spend less!” That can be spun like a doomsday scenario, but it also means that 75% of respondents to the survey are not planning to scale back—a boring fact that’s not going to get eyeballs on the analyst’s blog.
That’s not to say jewelers should ignore economic data. But like any other small business owner, they need to narrow in on the data that will impact their business and filter out noise.
Pearkes says the two biggest economic indicators that matter to small businesses for near-term planning are state and local employment data and homebuilding data. Those will indicate whether population and consumer spending in the area are rising—for jewelers, directly translating into opportunity for sales. Another statistic worth tracking is prime-age employment to population, which he says tells how 25-to 54-year-olds are doing; valuable both for tracking demand and for figuring out how difficult it will be to hire.
Following the GDP and other federal economic indicators is helpful if you can track your business's trends over the same period and compare how it did at those times. It can give you a sense of what it will look like when the [national] metrics go this way or that, says the Inc. article.
Peakes says it’s also important to remember that what constitutes a “small business” varies widely, and reading sentiment surveys from small business owners doesn’t mean they all own businesses like yours. For instance, is a 10-store franchise the same as 10 small businesses, or is it one larger one? Peakes says payroll processor ADP measures employment at small businesses by individual doors, whereas the U.S. Bureau of Labor Statistics measures by firm.