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Small biz set for slowdown
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June 15, 2000: 7:39 p.m. ET
Survey shows Main Street planning for slower sales, jobs; 'soft landing' seen
By Staff Writer Steve Bills
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NEW YORK (CNNfn) - Things are going well for U.S. Trucking, a Charleston, S.C., based shipping company, but Chairman Anthony Huff is keeping a wary eye on Federal Reserve Chairman Alan Greenspan.
"I think Greenspan will continue to put pressure on till the first quarter of next year," Huff said Thursday at a reception in New York where General Electric (GE: Research, Estimates) was introducing a new Small Business Solutions program.
Small businesses nationwide braced for a slower economy in May, an advocacy group reported Thursday, signaling that interest-rate tightening by the Federal Reserve is having an impact on Main Street.
Sales expectations dropped by 10 percentage points, and hiring plans fell by five points, the National Federation of Independent Business Education Foundation reported, based on its monthly survey of small companies.
 Overall, the NFIB's Small Business Optimism Index slipped two-tenths of a point from April, to 100.5. Profitability remained strong on Main Street, with reports of improved earnings hitting the highest level in a decade.
Even with the clouds over the outlook for sales and jobs, small firms' spending plans "remain very strong when judged by historical standards," said NFIB Chief Economist William C. Dunkelberg. "We're talking simple slowdown, not recession." He voiced optimism that the economy would be able to achieve a "soft landing," with growth continuing at a more sustainable pace.
The labor market continued to be tight, with 34 percent of firms reporting hard-to-fill job openings, matching the record level set the previous month. And more than a third of the 547 small-business owners in the survey said they had raised employees' pay in the previous three months, the highest level in the 25-plus years the NFIB has been conducting the monthly survey.
The tight job market and its wage pressures presented perhaps the most worrisome aspect for policy makers, as Dunkelberg warned pay hikes "now seem to be outstripping gains in productivity" among small firms.
Huff, the trucking executive, thinks the higher cost of capital will soon cause real pain.
"We're in a high-volume, low-margin business," and the higher interest rates are likely to cause some consolidation among his shipping customers, he said.
U.S. Trucking itself is expanding, doubling its sales last year and making a series of acquisitions that should keep it growing. But Huff fears for smaller companies that lack access to affordable capital: "I don't think we're going to have a smooth landing, no." 
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