Small Business Confidence Retreats After Three Months of Gains

Will Sequester Take a Bite Out of Restaurants' Business?

Fred Deluca, Subway founder & CEO, explains how government cuts could impact consumer spending, jobs and the economy.

American Entrepreneurship at Risk?

A factor in the jobs drag is mandatory federal spending cuts. "One reason is the sequester. I think that will start to kick in," Moody's economist Mark Zandi said last week on CNBC. "I think that will start to show up in jobs in the next few months. The other thing is health care." (Read more: Sequestration ? CNBC Explains)

For employers, there has been a heavy cloud of uncertainty about anticipated spending cuts and costs associated with Obamacare that go into effect in 2014.

But unlike larger private sector businesses, smaller employers usually don't have buffers such as large cash reserves to ride out federal budget cuts. Most smaller firms also can't quickly pivot business strategies to ride out a rough patch. So their strategy has largely been staying in a holding pattern?including hiring decisions.

Fred Deluca, the founder of privately held Subway Restaurants, said the government is simply out of touch with small-business owners. Policies including Obamacare discourage entrepreneurship and the American dream of owning your own business, Deluca told CNBC's "Squawk on the Street" in February.

Added NFIB's Dunkelberg, "For the sector that produces half the private GDP and employs half the private sector workforce?the fact that they are not growing, not hiring, not borrowing and not expanding like they should be, is evidence enough that uncertainty is slowing the economy."

?By CNBC's Heesun Wee; Follow her on Twitter @heesunwee

(Read more: Subway 'Wouldn't Exist' If Started Today Due to Regulations: Founder Deluca)

Source: http://www.cnbc.com/id/100623684

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