Low interest rate model for growth
The central bank has relied heavily on low interest rates and asset purchases to stimulate growth. This has worked to a certain extent with the economy showing some signs of recovery. Policies for lending money to businesses have been eased to a large extent, thus encouraging businesses to embark on expansion plans.
Recent surveys by Vistage International and SurePayroll represent a different picture altogether with regard to the sentiments of small business owners. These surveys show that their confidence in the economy has plummeted of late. Another survey published by the National Center for the Middle Market shows that the executives of medium sized companies aren’t as pessimistic, but are not optimistic either.
The underlying issue
The current valuations of several companies are well over their real worth which indicates a bubble-like scenario. Adding to that, the economic outlook still remains uncertain as the future effects of the health care reforms are unknown. The recent recession and the government shutdown are other events that are still fresh in the minds of many business heads. On top of all that, the general opinion, even among some of the lenders is that the availability of debt currently far exceeds the need for it. Hence, even though companies are finding it easier to get funding, it is not surprising that many are still wary of rushing for it, maybe rightly so.