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Small business owners in North Carolina and across the U.S. are growing increasingly uneasy as the country barrels toward the “fiscal cliff” at the end of the year, according to survey results from PNC Financial Services.
But PNC chief economist Stu Hoffman told a gathering at the Westin Hotel in uptown Charlotte on Thursday morning that he expects Washington D.C. lawmakers to reach some sort of an agreement to avoid the $600 billion package of automatic tax increases and spending cuts set to go into effect Jan. 1.
“If we have that kind of fiscal constraint, we’re going into recession,” Hoffman said. “I don’t think the U.S. economy is going to be allowed to fall over the fiscal cliff and break its scrawny neck.”
Hoffman’s presentation accompanied the release of the bank’s semiannual small business outlook surveys, which for only the second time included North Carolina. PNC entered the Charlotte market with its acquisition of RBC Bank this spring.
Across the U.S., the survey found that 23 percent of small businesses intend to hire new employees in the next six months, down slightly from 28 percent this spring. Ten percent planned to cut jobs.
In North Carolina, 10 percent of small businesses planned to add employees, down from 20 percent in the spring. Six percent planned to reduce headcount.
More than half of both groups said they were pessimistic about the national economy.
To that end, Hoffman predicted continuing slow, moderate economic growth. He said that the European debt crisis and a slow-down in China would put a damper on that, but he called Washington the “biggest threat” to the economy.
Still, he envisioned a “12th hour” compromise of sorts that would lead to the most dramatic of the tax increases and spending cuts being delayed.
Maybe the economy will “break an arm” falling off the fiscal cliff, Hoffman said. “But it won’t break its neck.”
