The recent unemployment claims have made it urgent for President Barack Obama to take congressional action on legislation so as to cut taxes and ease credit flow. The legislation that Obama wants to promote would ease loan terms and provide up to $12 billion in tax breaks to small businesses. Banks with $10 billion in assets will also receive $30 billion so as to encourage lending to small businesses.

The legislation is opposed by Republicans like Senator Richard Shelby of Alabama as he says that it is a government rescue measure similar to the $700 billion bank bailout of 2008. Banks may have to grant risky loans. Obama, however, urged Republicans to stop blocking the measure and prodded lawmakers to consider the bill when they reconvene in September.

The economic index of the Federal Reserve Bank of Philadelphia fell to minus 7.7 this month from 5.1 in July. The below zero reading indicates contraction in places like Pennsylvania, southern New Jersey and Delaware. Obama says “Small businesses and community banks that loan to small businesses have been lagging behind.” He adds that the report of Labor Department “compels us to act.”

During the congressional and state elections in November, ‘economy’ is going to be a top issue for voters. Obama said, “There will be plenty of time between now and November to play politics. Let’s put aside the partisanship for a while and work together.”

Experts agree the economic recovery is ailing, but there’s little consensus on a cure.

President Barack Obama and his allies want to continue stimulus efforts, but Republicans argue that continuing to throw money at the problem is only driving up the national debt.

An August survey of the National Association of Business Economists found that three-quarters of its members believe that promoting economic growth should be a higher priority than reducing the national deficit, according to CNNMoney.com.

With fears about a double-dip recession growing, the survey of 84 NABE economists who work at private-sector companies and industry trade associations provides no clear answer on how to keep that from happening.

Nearly 75 percent of NABE members said they don’t think another stimulus package is necessary to get the economy back on track. At the same time, a majority believe policymakers should do more to boost job growth, said CNNMoney.com.

After rebounding from the most serious economic downturn since the Great Depression, the rate of continued economic growth has slowed significantly. Government figures released last Friday revealed that U.S. domestic product, the broadest measure of economic activity, grew at an annual rate of 1.6% in the second quarter; down sharply from the previously estimated 2.4% growth rate. And it’s a big drop from the 5% growth rate seen in the fourth quarter last year, said CNNMoney.com.

Just under half of the NABE economists said deflation is the main threat to the economy in the short term. Deflation occurs when both prices and demand fall, creating a downward spiral that can stifle economic growth for years, said CNNMoney.com. Responses were mixed whether inflation or deflation posed a greater risk to the economy over the next three years.

There was also little consensus among NABE members on when the Federal Reserve should raise interest rates and begin selling assets it bought during the crisis, said CNNMoney.com.

Only 38% of economists surveyed believe that the nation’s current financial policy is “about right,” but 64% of them supported recent legislation to extend unemployment benefits.

The economists did reach agreement on the issue of tax cuts. A majority of them said that none of the existing tax cuts on individual income, dividends and capital gains should be allowed to expire, said CNNMoney.com.

When Congress returns to session next month, they will have to determine the fate of more than 100 tax breaks that have expired or are set to expire soon.

Many small businesses are happy to make a profit period, but if your business is coasting along with the same profit margin for a long time, you could be headed for trouble.

Many businesses build to a certain level, hit a plateau and remain there. That stability can turn into stagnation, says small business owner Ivan Widjaya on www.noobpreneur.com.

A stable profit margin can mean you’re not generating new leads. You may be holding on to existing customers, which is great, but what happens if a customer or two cuts back or stops doing business with you altogether?

If you don’t want to find yourself in that precarious position, you should always be looking for leads. You’ve probably heard it before, but it bears repeating: The best place to find new leads is at local small business networking events.

Start by visiting your local Chamber of Commerce to find out when they hold meetings and which other local businesses are involved. Attend those meetings and get to know like-minded business owners in your area so you can share tips, marketing strategies, and build working relationships and friendships. Remember, people will help their friends first.

Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, in his remarks seemed critical about the current zero percent rate of the Federal Reserve (link to ). He says that it should be hiked from 0% to 1% and then moving to 2% gradually. This is needed or else it will leave a policy that will only result in financial imbalances in future. He is quoted saying “We need to get off the emergency rate of zero, move rates up slowly and deliberately.”

Recently, the Fed has decided to support the economy by maintaining the size of its balance sheet without allowing it to shrink. The Fed will do this by reinvesting into the Treasury, as well as the proceeds of its mortgage holdings. But this is seen as controversial as many believe that the Fed is just trying to show that they are willing to do something to stabilize the uncertain economy.

Hoenig’s dissent is worrisome as he believes that keeping interest rate at zero will limit the Fed’s flexibility. Also maintaining the balance sheet does not justify the economy now. As a Federal Open Market Committee voter, Hoenig, says that this policy would lead to fresh financial imbalances. He clearly advocates raising the Fed’s interest rates. He is quoted saying “I wish free money was really free and that there was a painless way to move from severe recession and high leverage to robust and sustainable economic growth, but there is no short-cut.”

Though the unemployment rate is high and economic conditions unfavorable, there is a modest ‘recovery’ that is proceeding with mixed results. The GDP is also expected to rise by 3% by year end. The policy maker said, “We are experiencing a better pace of recovery this time than at this point in our previous two economic recoveries.”

Opening or investing in a small business is always a gamble, but investor Jack Stack, who has acquired or invested in more than 60 ventures, has picked up some valuable insights about evaluating the potential success of a new business.

Stack, the founder and chief executive of SRC Holdings in Springfield, Mo., is one of the foremost practitioners of open-book management, which means that all employees are privy to information about a company’s finances. Employees are taught how the business works and how they can be part its success.

While Stack has had a hand in many successful ventures, he’s also seen his share of failures. In a blog in the New York Times, Stack says those failures helped him develop three questions to ask when evaluating a business’ potential.

1. Does the company produce positive cash flow? To be successful, every business needs a steady cash flow, which requires managing the spread between payables and receivables. A business need to get paid before its bills are due.
2. Does the company cover its costs? Ask if the business can absorb its own overhead. That means they must break out the fixed costs from the variable costs. The fixed costs are the ones that don’t fluctuate with volume, like rent.
3. Can it be diversified? Is the company capable of producing different products and services, or can it expand existing products and services to new markets. A businesses shouldn’t put all its eggs in one basket.

Stack says business owners need to ask themselves these questions and look at the business as an outsider would. “If you don’t like what you see,” he says in the blog. “It’s time to begin making some changes.”

It is not always tough to find men CEOs as it is tough to find women CEOs. In a recent conference staged at Stanford University, just six female CEO attended. That too the moderator could find them with much difficulty. It is a real shame. But in high-tech entrepreneurship, it seems that a new wave of female entrepreneurship is all set to erase the gender imbalance.

One good example of such women CEOs is Carol Realini. She started a company then sold it, started another public company and now currently is working on a third company. For this, she raised $140 million in five years. According to Realini, the scenario has improved in last 10 years for female entrepreneurs. Nowadays, women are taken seriously and it no longer said that women can’t become CEOs or raise money. Realini, CEO of Obopay, says “The challenge of being a woman CEO is, one, you’ve got to get in the game. So, you have to be willing to try.” She says that it is important to navigate into the world of venture capital in order to learn methods of raising money.

Entrepreneurs need to be smart and follow those who have become successful in their entrepreneurship. People need to ask for and be flexible and compromise with their private life for some length of time.

Challenges are for all – male entrepreneur as well as female entrepreneur. Realini says, “It is not about women. A man’s got the same challenges and a male entrepreneur, a black entrepreneur, a gay entrepreneur, they’re all going to have the same challenges.”

A paper by Oakland venture capitalist Cindy Padnos has revealed that women are positioning themselves as good entrepreneurs. More women are starting companies, making them public and bringing bigger returns to small investors.

The National Federation of Independent Business (N.F.I.B.) has decided to back Cory Gardner, a fast-rising member of Colorado’s House of Representatives in the general election campaign. The N.F.I.B has declared to contribute $5,000 which according to Sharon Sussin is the maximum amount permitted by law. The group has also decided to invest in advertising for the campaign, both in traditional and online media.

In the endorsement announcement, the N.F.I.B. committed itself to inspire its Colorado members so as “to help turn out the small-business vote on Gardner’s behalf on Election Day.” N.F.I.B. has 7,500 members in Colorado out of which 1,700 are in the Colorado’s Fourth district where Gardner is going to contest.

Mr. Gardner describes himself as a “leading conservative in the State House” and is a proponent of limited government and common-sense principles that includes economic growth on the basis of lower taxes. Mr. Gardner also has endorsed renewable energy transmission projects and backed state government loan guarantees. For this he also wrote legislation to launch the ‘Colorado Energy Development Authority.”

Ms. Betsy Markey has also contested from Colorado’s Fourth District and was elected in 2008. She comes from the ranks of small business as she owned and operated two small businesses. Ms. Markey is the most vulnerable in the 2010 mid-term elections as N.F.I.B. has declared her as a Republican opponent.

The July snapshot of the job market proved that the government sector has declined in jobs and the private sector has barely expanded. As evidence to this fact are 14.6 million Americans still jobless, government employment which has fallen by 59,000 and the economy shedding 131,000 jobs after 143,000 temporary census workers were removed from the federal payrolls.

The employment rate remained steady at 9.5%. On an average, the private sector has added 90,000 jobs a month this year. In July, the private employment rose to 71,000 after 31,000 in June. Two-thirds of the private sector job creation occurred during the period of March and April.

Tig Gilliam, chief executive, Adecco Group, says, “It’s a double whammy because it causes people to take a psychological step back. Now, it looks like not only has the economy slowed, but maybe it wasn’t as good when it was originally reported as we thought.”

The Dow Jones Industrial Average initially went down to 160 points but later it rose 21 points to 10,653.56. The 10-year treasury yield plummeted to 2.82 percent following demand for US government debt. The two-year note dropped to 0.514 percent after an all time low of 0.494 percent during the day.

Congress, White House, and the Federal Reserve came under pressure to increase the measures being taken to bring growth in the labor market. Fed officials are considering on reinvesting proceeds from mortgage-backed securities so as to continue support to the economy.

Without strong evidence of economic stability, even expanding sectors seem wary of adding new jobs. Private employers have increased their shift timings instead of making new recruits. Overall weekly work hours rose 0.3 % and in manufacturing 0.5 %.

In July after 9 straight months of growth, temporary employment declined to 5,600. This is supported by government figures. Mr. Gilliam of Adecco says “momentum has slowed dramatically. If that’s the case and that’s where we’re going for the next couple of months, it suggests a step back in the job-market recovery.”

Since last July, state and local governments have cut 48,000 jobs. To aid state governments, a $26 billion package is set to be released but this will only be minimally effective. A weak labor market would levy pressure on incomes and consumer spending. In June, consumer credit dropped at a 0.7% annual rate. Revolving credit declined at a 6.5% rate. 6.6 million people remained jobless for 27 weeks and this accounted to 44.9% of unemployment.

In an economic downturn, does “compassionate capitalism” go out the window?

Kip Tindell and John Mackey, the founders of The Container Store and Whole Foods, are trying to ensure that doesn’t happen. Both businesses were built on the philosophy that employees and the community are as important as investors and customers.

Tindell and Mackey created the nonprofit Conscious Capitalism Alliance, which will hold its third annual business summit in October. Trader Joes and Seventh Generation are among the 130 invitation-only participants attending the conference.

But will it make a difference in how companies actually do business these days?

Entrepreneur.com blogger Carol Tice observes that the doing well by doing good mantra that many businesses preached several years ago has quieted since 2008.

“But do these high-minded values still work for entrepreneurs trying to keep their businesses alive in the recession-plauged 21st Century?” Tice asks in her blog.

What’s your take — is it unrealistic to expect successful companies to also be good corporate citizens?

The S&P 500 Index fell 0.4 percent to 1,121.64 paring weekly advance to 1.8 percent. The Dow also fell 21.42 points or 0.2 percent to 10,653.56. The treasury yields also declined with the two-year rate falling below 0.5 percent, which is a first.

Job Scenario

The unemployment rate is stagnant at 9.5 percent. Overall, employment fell by 131,000 as temporary jobs were reduced by the Census Bureau. In the S&P 500 index, JP Morgan Chase declined 2 percent to $ 40.44. IBM also dropped 0.8 percent to $ 130.14. EOG Resources fell 3.1 percent to $ 99.26. Harman International Industries Inc. dropped 12 percent to $ 29.88.

Companies witness fall

Registering its biggest drop since May 2009, the Washington Post plummeted 7.6 percent to $377.56. Its Kaplan unit may have a material adverse effect due to the proposed rules of the US Department of Education.

Activision Blizzard Inc. declined 6.5 percent to $10.99. The company that is the largest video game publisher estimates its sales in this quarter to be $ 725 million while analysis estimates $ 914.5 million sales on average.

Earnings Alert

Companies from Humana Inc to Allergan Inc claimed profit much greater than what average analysts estimated. Earnings beat estimates at more than three quarters as the S&P 500 advanced.

Kraft Foods Inc. rose 2.4 percent to $30.36. American International Group gained 2.6 percent to $ 40.93. Perkin Elmer Inc. climbed 11 percent to $22.29.

Major Recovery

Data compiled by Bloomberg and S&P revealed that profit earned by 443 companies in the second quarter aggregated to $21.45 a share. “We’ve had a huge recovery in corporate profits mostly due to cost-cutting,” said Brian Lazorishak, senior analyst at Chase Investment Counsel Corp.

As forecasted by S & P, sales per share were estimated to total $235.54 this quarter. Sales have recovered less than 7 percent from the first quarter of 2009 where there was a three year low of $221.80 a share.

Slowing of Growth

In the first quarter, growth slowed to 2.4 percent from 3.7 percent at the last quarter of 2009. This triggered fears that the nation might be entering into another recession. In June, consumer spending reports pending home sales and factory orders, were all weaker than what economists presumed it would be.

Joseph E. Stiglitz, Nobel Prize winner, Economics, says, “The recovery is so weak that it is not strong enough to generate new jobs for the new entrants in the labor force, let alone to find jobs for the 15 million Americans who would like a job and can’t get one.”