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Small Business & Retail — Economic Slowdown: Soft Landing or Bad Dream?

New E-Firm Has Big Aim: Bring Back the Jukebox

Will the cooling economy lead to a “soft landing” or a “bad dream”?

A chill wind is blowing through the nation’s economy, according to a report released July 17 by the National Federation of Independent Business. The Small Business Economic Trends report stated the Small Business Optimism Index fell 2.6 points in June, to 97.9 , the lowest reading since the fall of 1993.

A 10-component measure of the economic status, plans and expectations of America’s small businesses, the index is a reliable predictor of short-term change in gross domestic product and employment, said NFIB Chief Economist William C. Dunkelberg.

Seven of the 10 index components declined from May levels, led by a 12-point plunge in reports of improved earnings. Only one component, sales expectations, improved. Two others , job openings and inventory investment plans , remained unchanged.

“Is the economy slowing? Most definitely,” Dunkelberg said. “Sure, small-firm employment growth remains positive. Indeed, June was better than May in this regard, but it’s still nothing to write home about. Meanwhile, capital investment plans are down 11 points from the record high reached in this expansion, and hiring plans are 10 points off their peak.”

What hasn’t eased, he noted, is tightness in the labor market. For the third month in a row, the SBET finds 34 percent of small firms reporting hard-to-fill job openings , a record high level first reached this April.

Small employers have countered by raising employee compensation, with 32 percent increasing their payrolls in June, only two points below the record set in May, he said. Still, one in five owners last month identified “finding qualified labor” as their single biggest problem.

That, of course, leads to higher prices. The percentage of small firms raising prices exceeded that of firms cutting prices by 19 percent , the largest spread in a decade, Dunkelberg said.

“The good news from the June SBET is that it shows no sign of a recession. A ‘soft landing’ is quite possible,” Dunkelberg said. “The bad news is that , with the economy slowing and inflation picking up , a ‘bad dream’ scenario of lower productivity, slumping sales and leaping labor costs is now an equally likely outcome. The next few months promise to be pretty nerve-wracking for policy-makers, Fed-watchers and market analysts as they watch to see which scenario actually plays out.”

The NFIB Education Foundation has issued its Small Business Economic Trends reports for more than a quarter-century. The latest report is based on a June survey of 503 small-business owners from throughout the nation.

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Not Your Father’s Wurlitzer: Two San Diego-based companies have joined together to create the world’s first Internet-based jukebox machine.

“Yup, it’s a real physical jukebox, just like the super-cool old-time jukeboxes we all know and love,” said Virginia Amann, spokeswoman for Fun e-Business, the builders of the machine.

The difference is instead of having a cache of a few 45s or even a few hundred CDs, the machine will connect to the Internet. Customers can enjoy popular music from a digital library of hundreds of thousands of songs, she said.

Fun e-Business has partnered with MP3.com for the local and regional music content on the Web-enabled Wurlitzer Fun e-Jukebox. The touch-screen Internet jukebox will be deployed worldwide in 20,000 bars and restaurants in the next three years, Amann said.

In addition, Fun e-Business announced July 12 it is partnering with the San Diego-based Internet division of Louisville, Ky.-based Darwin Networks on another Fun e-Business product. Darwin will provide its software for the Fun e-Station information station, similar to the kiosks customers frequently see at airports, but “lots more fun, and much easier to use,” Amann said.

“Darwin Networks saw an opportunity to combine the technical strength of our company with the great content Fun e-Business offers to provide a better experience for people accessing the Internet in public places,” said Eric Wagner, president of Darwin Networks’ Public Access Division. “Our relationship will enable each of our companies to focus on what it does best to improve public Internet access across the board.”

Darwin Networks has implemented stations in hotels and most recently at Kampgrounds of America (KOA) locations. Additionally, Darwin Networks produces, installs and operates multimedia kiosks designed for retail and E-commerce, interactive information distribution, communications, entertainment, advertising and other uses.

Fun e-Business provides access to Internet-based entertainment and communications in public places with simplified, colorful user interfaces. The company is completing installations of its touch screen Fun e-Stations in airports across the country, and plans to install additional Fun e-Stations at brick-and-mortar businesses for online shopping, at corporations for improved guest and employee relations, and in other public places in the coming months, Amann said.

The small business and retail column appears weekly. Send items to Lee Zion at lzion@sdbj.com.


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