Like most small business owners over the last decade I have been challenged with managing rising health care costs. My typical approach has been the same as many others, I reduce the company’s contributions, I reduce the benefits package, or I do both. For the business we own now our plan is essentially an HSA (health savings account) style plan. I can’t say I like this plan, and our employees are not overly fond of it either, but it does give everyone some coverage that the business can afford.

Many people do not understand what a challenging issue this is for small business owners. Many new companies choose to operate without coverage, which in itself can be risky, but the business owner may have no other choice. I ran across this article this morning which gives some advice on how to shop around for health insurance for your business. This is a problem which is not going away anytime soon!

The Rough Air Demand Index for last month fell back to a strong negative despite a surprisingly strong GDP number.  The two main issues holding back demand were a big drop in private domestic investment, and a weak jobs market.  The index was boosted slightly by the GDP, which were pushed up due to the stimulus rebates getting into the hands of taxpayers, the challenge is that is a one-time hit, and will not have a big impact on growth going forward.

Meanwhile the Rough Air Cost Index took a step backward as energy cost continued to put pressure on overall inflation numbers.  This summer’s oil prices spiked in early July over $140 per barrel; however, prices have come back down over the last several weeks so we expect next month’s Cost Index to improve slightly. 

The U.S. Government released  its data for second quarter growth, and it came in better than expected.  The economy grew at a pace of 3.3 percent during the second quarter, stronger than the expected 2.7 percent.  The growth is being attributed to stronger consumer spending, which was spurred by the stimulus rebate checks sent to taxpayers.  This is good news for a beleaguered economy that has been suffering under the weight of a housing downturn and credit crunch, although analyst are not expecting third quarter growth to be as robust as the second.

We have seen recent data that suggest we are nearing the bottom in the housing market; however, there are some other things that have me a bit concerned that we may be looking at a “double-dip” downturn.  The first is the job market, the U.S. economy has lost 422,000 jobs so far this year.  I don’t believe we have seen the full economic impact of these job losses yet.  The second is a dollar which is now getting stronger, a stronger dollar may mean a pull-back in exports.  The third is what I am hearing from business owners today, and that is that they are feeling some effects from an economic slowdown.  Perhaps these are the remnants of the slowdown caused by the downturn in housing; however the stimulus in the second quarter was a temporary injection into the economy.  It may not create a sustaining effect! 

Prepare for oil prices to rise over the next few days as Tropical Storm Gustav (likely to be a hurricane by this weekend) makes its way into the Gulf of Mexico.  The storm appears to have a perilous path, and is expected to strengthen as its gets out over the warm waters of the Gulf.  If it heads into the Gulf I would expect oil prices to temporarily spike over the next few days.

Orders for durable goods rose unexpectedly in July, boosted by increases in business investment and aircraft orders.  This is also good news for an economy which is searching to stimulation!

Home prices are still falling, but it appears that lower prices are starting to attract buyers back into the market.  This has many analyst pondering the possibility that we may be nearing the end of the housing slump.  This would be great news for an economy that has been in a stalled mode for the last several months.

I ran across this article in The New York Times about the biggest issues facing small business today.  Healthcare cost are at the top of most small business owner’s concerns, and the rising cost of doing business, this includes healthcare, energy, and inflation.  I know for our two businesses healthcare cost are a primary concern.  Like most entrepreneurs we have either had to pursue a path of reducing benefits, increasing employee contributions, and/or taking the hits from increased cost.  When you add in the rising cost of energy, the bottom line of any small business can get squeezed.

None of these issues are going to go away soon, and I doubt any of these cost will stabilize.  Business owners need to prepare themselves to continue to deal with these issues, work on efficiency and cost in their operations, and focus on reducing the impact of rising cost in these targeted areas. 

I was watching the local news yesterday morning, and they were celebrating the fact that gas prices had fallen nationally to $3.70 per gallon from the high over $4.00 per gallon this past summer.  I had to scratch my head wondering just how great this news actually is!

Current gas prices are 34 percent above where they were at this time last year, that is just under $1.00 per gallon more.  This hardly seems like something to celebrate given the impact higher energy cost has on all areas of our economy.  It is true prices at the pump are falling.  This is being driven by two major economic shifts. The first is slackening global demand.  Expectations are that demand for energy around the globe will soften over the next few months as the economic slowdown that started here in the U.S. starts to impact other economies.  Since many global investors believe the U.S. is further along in this economic cycle there is an expectation that the economy here at home will begin growing before economies overseas, this is causing the U.S. dollar to strengthen.  The combination is helping to push oil prices down.

If you are expecting these factors to force gas prices down to 2007 levels below $3.00 per gallon anytime soon, I think you might be disappointed.  It appears to me we have tested the highs for the time being, and other than temporary spikes, we are probably going to see prices stabilize in the $3.00 – $4.00 range.  The reality as soon as global demand picks up again prices will begin to accelerate, and we will start testing new highs!

Existing home sales rose in July more than expected on buyers taking advantage of good deals in markets that have been hit hardest.  The downside was that inventories of unsold homes rose to an all-time high indicating the housing slump is still far from over.  The sales increase is a good sign showing that buyers are ready to put a toe back into the market, the inventories though must start to come down before the housing market will be out of its long slump.

My oldest daughter went off to college last week, so we spent the last several days driving across the country to help her get set-up in a new environment a long way from home.  Despite the emotional turmoil of coming to the realization that I am old enough to have a kid in college, I did have time to think on the long drive from the Midwest to the southwest.

As we were driving across Northern Texas we came across a huge wind farm.  There were acres and acres of windmills spanning the highway spinning slowly in an effort to generate power for area customers.  The site of the windmills had me wondering why we don’t see more of these.  Most of us recognize the challenges we face with rising energy prices, and energy security.  Both of our political parties are trying to propose solutions that help us move towards energy independence, whether it is conservation or additional drilling, it is one the big issues on the table today. 

As I looked at the windmills I was asking myself what am I missing?  Why isn’t our government or industry pushing the envelope in the effort to expand alternative energy sources.  Why is it that anyone who pushes this agenda is immediately pushed to the fringes of this debate?  We know we have a challenge, we have potential solutions, let’s get it done.