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Kathleen Madigan
Oct. 29, 2010, 12:01 a.m. EDT
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By Kathleen Madigan of Dow Jones Newswires
NEW YORK (MarketWatch) "” The weak economy has been the main focus of the U.S. midterm campaigns, and small-business owners want change they can believe in.
Yet the upcoming elections themselves were responsible for some businesses delaying decisions that, if they had been taken, would have strengthened the economy over the summer.
Those are the findings of two election-related surveys done recently. Sage, a provider of software and services to small businesses, and Discover Small Business Watch polled small-business owners about the economy and the elections.
Politicians from both parties are debating ideas on taxes and spending that move the discussion to the right, with the GOP expected to gain power following Tuesday's election.
They see some signs of hope. The Discover survey showed that 28% of them expect economic conditions to improve in the next six months, up from 20% saying so in September.
Part of that sentiment may reflect predictions that Republicans will regain control of the House of Representatives, with longer odds given for the GOP taking the Senate. Of the small-business owners polled in the Discover survey, 51% said it would be better for the economy if the Republicans control Congress, versus 39% opting for Democrats.
The most striking feature of the Sage survey was the passion shown by business owners, according to Connie Certusi, general manager at Sage's small-business accounting unit. The survey showed a massive 93% of small-business owners plan to vote next Tuesday. Compare that with the 2006 midterm election, when only 37% of all U.S. voters bothered to go to the polls.
Strangely, much of the current economic policy already has been focused on helping small businesses, including the recently signed Small Business Jobs Act, or SBJA.
So far, though, small-business owners are not feeling the love.
In the Sage survey, only 16% of participants reported benefiting from the 2009 stimulus. When asked if they thought the SBJA would be helpful, only 27% said yes. But when asked about specific provisions in the SBJA, a larger 44% thought the $33 billion in tax incentives "” including immediate tax write-offs for equipment purchases "” would be beneficial to their companies.
"Small businesses are not feeling any immediate benefits from the bills that have passed, but there is concern and uncertainty about the bills' burdens in the future," said Certusi.
The uncertainty of the elections caused many small businesses to delay moving forward, Sage found. A significant 30% of small businesses said they have put off a business decision until after Nov. 2.
Those delays probably contributed to the slowdown in business spending during the summer, which was reflected in manufacturing.
Numbers on durable goods released by the Commerce Department Wednesday show business spending on equipment contributed far less to real growth in gross domestic product in the third quarter than it did earlier in 2010.
Economists at Barclays Capital calculate shipments of nondefense capital goods excluding aircraft grew at an annual rate of 9% in the third quarter, far slower than the 17.4% gain logged in the second quarter.
As a result, Barclays estimates business spending on equipment and software grew 12% in the third quarter "” a slowdown from 24.8% in the second quarter.
Barclays estimates third-quarter GDP grew at a 2.5% rate. That's better than the second-quarter pace of 1.7%, but still not fast enough to generate strong job growth and make this recovery feel like a recovery for workers, investors and small-business owners alike.
Kathleen Madigan is the primary author of the Big Picture column. This column originally appeared on Dow Jones Newswires.
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