Fiscal cliff threatens small businesses still in recovery
Sun-Times Media December 28, 2012 4:40PM
Robert Jones, President, American Sale Corporation home recreational products and holiday decorations. Jones, has concerns about the fiscal cliff of small business. December 27, 2012 I Scott Stewart~Sun-Times
Updated: January 31, 2013 6:38AM
Small-business owners in the Chicago area are worried that if Congress fails to reach a deal to avoid the fiscal cliff, they’ll feel the pain in the form of fewer customers.
“A lot of our customers may be impacted by the higher (tax) rates,” said Bob Jones III, co-owner and president of American Sale Corp. The Tinley Park business employs about 325 people and operates eight stores, including one in Aurora, that sell home recreational products, including swimming pools, hot tubs, and pool tables, as well as holiday decorations.
If consumers are feeling squeezed, they’ll have less discretionary money to spend, he said.
“This is on top of a reduction in consumers’ discretionary dollars that’s already happened over the last three or four years,” in the wake of the Great Recession, he added.
“If the fiscal cliff creates a recession in 2013 ... that’s going to cause us to make changes, which typically means that we have less employees,” he said.
It also will curtail investment, he said, noting his company has been looking for opportunities to add another store.
The uncertainty of looming tax hikes could also scare people away from taking the leap into homeownership early in 2013. But Ron Jakious, of Aurora-based Ron Jakious Real Estate, is optimistic.
“Sure, everybody’s worried about it, but people still have to have a place to live,” Jakious said.
Despite the possibility of higher taxes and the uncertainties of the new tax code, Jakious said he doesn’t feel his real estate business is threatened by Congressional inaction. He said he’s looking forward to having 2012’s bounceback in real estate continue into 2013.
“It seems to me the market is starting to come back, the market is stabilizing,” he said.
Fiscal cliff or not, Jakious said, people still have life changes ahead of them, and finally have some mobility in a housing market with a lot of pent-up demand.
“Because there’s very little new construction, the resale market is pretty good,” Jakious said. “A lot of people who are close to retirement want to downsize, and there’s a lot of young people trying to buy houses. I think we’re going to see a good year in 2013.”
Dick Portillo — the man behind Luigi’s House in Aurora and the dozens of Portillo’s restaurants around the region — is less optimistic for the new year, regardless of whether Congress strikes a deal.
“For me, just leave things the way they were,” Portillo said.
He said that going over the proverbial cliff would mean less money in his customers’ pockets, which means less money spent in his restaurants. But a deal that would increase taxes on top earners like himself means less money he could reinvest in his company, which employs about 4,400 workers.
“When you start taxing the people that invest money in the economy, whether they’re building a shopping plaza or a restaurant or a warehouse, that’s less money I’ll be able to put in the economy,” he said. “So either one is bad, one because my customers will have less money to spend, the other because I’ll have less to invest.”
But the bleak outlook hasn’t stopped him from expanding yet. Portillo said his company did well in 2012 — he’s building a new shopping plaza, recently opened a Portillo’s in New Lenox, and has new locations in Elgin, as well as two in Arizona, slated to open in 2013.
“If things were left alone, (the economy and deficit) would eventually catch up,” Portillo said. “Let capitalism, let entrepreneurship work, which is really what builds an economy.”
Staff writers Jenette Sturges, Francine Knowles
and Sandra Guy contributed to this story.