Average annual sales growth for private companies has slowed to around 5.4 percent currently from nearly 11 percent in January and from around 8 percent a year earlier.
Interestingly, though, net margins are higher now than they were at the beginning of the year. The Sageworks chart at the end of this article illustrates the switch. The clear takeaway is that consumers spend more when prices are low and spend less when prices are high. For privately held companies, most of which are small businesses, this poses a problem according to Sageworks’ CEO said:
The biggest issue for businesses right now is that they don’t know what is going to happen on major fiscal issues that affect their businesses. As such, they cannot plan out 12 and 24 months and adequately forecast their revenues, profits and cash. The slowdown in revenue growth could have significant implications on vital issues such as job growth and GDP.
About the only thing in plentiful supply right now in the U.S. economy is uncertainty, and that is not likely to change any time soon.
Paul Ausick
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