Recovery 'Bump': Small Businesses Say Uncertainty Keeps Them From Hiring

WASHINGTON, June 4, 2011— -- After the most recent jobs report, Kathleen Manning, the assistant manager at a Washington bead store, Beadazzled, doesn't need to look at economic statistics to know that the economy is not fully recovered yet. She only needs to look at the pace of the business in her store.

Manning says that their business isn't growing at the rate it once was, sales are down from last year, and they are keeping tight control on their inventory.

"It's a different world since the economic slowdown," Manning says. "A few years ago it was a whole different scene where people were spending a lot of money and it was extremely busy. There were people out. People were spending their money."

Manning's perspective is a reflection of the challenges facing small businesses across the country.

Manny Amaral, owner of a used car lot in New Jersey, says he's reluctant to hire more employees because of the slow pace of business. Amaral says he would like to hire two more employees, but instead, he's working 16-hour days.

"If I could I would and I need to hire, but there's all uncertainty in the business," Amaral says.

May's job report doesn't offer much comfort to small businesses reluctant to hire. The unemployment rate spiked to 9.1 percent and the economy gained fewer jobs than in any month in nearly a year -- only 54,000.

Despite May's bad jobs news, most economists are not predicting that the economy will enter a second recession. Chief Investment Strategist at Charles Schwab & Co., Liz Ann Sonders says she sees the recent decline as a temporary relapse.

"I think we're experiencing a soft patch in the economy, not all that different from what we saw last summer," Sonders says.

The White House is remaining optimistic, highlighting the overall jobs growth in the last year, though President Obama acknowledged in his weekly address today that the economic recovery is not over yet.

"We've got a ways to go," the president says. "Even though our economy has created more than 2 million private sector jobs over the past 15 months and continues to grow, we're facing some tough headwinds."

The president described the report Friday as a "bump," but some small business owners say it seems like more than that.

"The bump is very high. It's going to be very hard to go over it," Amaral said. "They talk a good game but they do nothing about it."