Here are some quotes:
The Index has posted 18 consecutive monthly readings below 90. The March Index continues this trend, and heading in the wrong direction, very inconsistent with the notion that the economy is recovering and that job growth has strength.
The weak economy continued to put downward pressure on prices. Seasonally adjusted, the net percent of owners raising prices was a negative 20 percent [read: 20% of owners were reducing prices], one point better than last month. Plans to raise prices fell one point to a net seasonally adjusted nine percent of owners. On the cost side, five percent of owners cited inflation as their number one problem (e.g. costs coming in the “back door”of the business) and only three percent cited the cost of labor, so neither labor costs nor materials costs are pressuring owners.
Since small firms produce half the private sector GDP, it is hard to envision a sustained recovery without their participation. [read: there's no recovery] Once the gains from inventory rebuilding are exhausted, it is hard to see what will fuel growth. Small firm capital spending is at 35 year low levels and plans for future expenditures are equally low. Plus, hiring plans remain “negative” as more firms still plan reductions than increases in their employment. In an NFIB sponsored survey of small Dunn&Bradstreet firms, 51 percent said weak sales was their top concern, but in second place with 22 percent of the “votes”was “uncertainty about the economy.” This uncertainty seems to emanate from the political side, in Washington D.C. and the states.
The administration is clearly favoring unions, from Executive Orders to special deals in the healthcare to the bailout of GM and Chrysler to card check -and the list goes on. [...]
Capital spending and inventory investment plans remained historically low as did plans to create new jobs. Profits trends are terrible, undermining owner’s ability to finance any aspect of growth. The private sector is struggling [...] The core of the problem –a refusal to control the growth and reach of government and to pile up huge fiscal problems that politicians will use to justify higher taxes and new entitlements and rights to be paid for by a diminished private sector.
Now, let's compare these two charts. Note that earnings have collapsed in 2008 and 2009 and that they are now stuck at these extreme lows while the stock market is not too far from its historical highs:
The actual small business earnings
(note: the vertical axis doesn't make sense to me)
Russell 2000 small caps index
Finally, deflation charts: