We’ve discussed before in this forum the negative impact of uncertainty on economic activity. The latest Newsweek tackles the topic as well.

Like too many other small-business proprietors, Arth doesn’t fully trust this economic recovery. While he says he’s “guardedly optimistic” about it, his actions are all about the first half of that phrase. He worries that rising gas prices will tamp down RV sales. The volatility in the price of metals and other commodities has brought a spike in the cost of his raw materials. “There’s still just too much uncertainty out there,” Arth says. …

… [A] more sobering account of where the economy might be headed—and arguably a more accurate barometer of the near-term future—is the monthly report published by the National Federation of Independent Business. After all, it’s small businesses, which have created two out of every three new jobs the economy has added since the early 1990s, that historically have led the country out of recessions. And it’s the owners of small businesses (defined as enterprises with fewer than 500 employees) that the NFIB surveys each month for its Small Business Optimism Index.

On that front the news is anything but good. The index is down for the second straight month. Fewer small-business owners expect conditions to improve over the next half year—a drop of 18 percentage points from January. The bulk of new hiring must be happening inside larger corporations, since their smaller counterparts on Main Street say they are generally reluctant to create new jobs. “Owners simply find no reason to be optimistic about the future, and therefore they find no reason to pick up the pace of spending and hiring,” says Bill Dunkelberg, NFIB’s chief economist.

Left unsaid in the article are some key questions only government can answer. What kind of tax rates will business owners be paying moving forward? What’s the future for the death tax, which often hits small business owners and family farmers hardest? What types of obligations (health care, unemployment insurance) will employers face toward any new employees they bring on board?