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For America’s Small Businesses, ‘Better’ Is a Relative Term
US small business optimism remained below the five-decade average for an eighth consecutive month in
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“All in all, the survey was hardly indicative of a broad-based upturn in small business confidence, but it did add to a growing list of incrementally positive data points, almost all of which suggest the US economy has, if anything, gathered momentum over the past 45 to 60 days. If I didn’t know any better, I’d be inclined to call the US “resilient.””
Which gives the Fed hawks more credibility and the FRB more cover to keep on tightening.
Please join me in saying farewell to the notion of an early pivot.
Good morning, Derek. I’m not a small business man, but my understanding was trending in the same direction. I appreciate your informed perspective and assessment. Thanks for your thoughts on this subject.
Chicago Bluesman – thanks for what may be a tongue-in-cheek compliment. I currently am a part owner of a 10 person shop, so medium-sized small biz? Health insurance is our #1 cost.
But this reminds me of some research I did on the NFIB survey and the small business job creation numbers. Back then the #1 issue in this survey was always taxes & regulation. That was the case for years, even when Bush II was cutting taxes.
Most interesting to me was lifting the hood to find that small business was, indeed, the major job creator. But a big reason was that small businesses were the largest source of business closures as well. So the widely-cited job creation numbers were partly a function of business turnover rather than endless expansion.
Also very interesting was the breakdown of the smaller enterprises. As I recall, over 50% were single person ventures. That was unsurprising to me – if one drives around outside of the “metro” areas in northern New England, you see an endless parade of small in-the-home businesses. Daycare, hair dressing, knife and saw sharpening, plowing, auto or appliance repair etc. That’s the American entrepreneurial impulse on display.
That said, just how much do these one-person businesses drive up wages and inflation??? Versus the larger oligopolistic businesses?
I’m just a guy working from home at the moment, consulting for various companies since I was dismissed from a role in a
local tech company. Thankfully, I’m marketable. I’ve had gigs at IBM and Microsoft, and I’m in process of hiring to consult at another big name.
The Commerce Department is vague in defining a small business. It’s generally a reflection of the number of employees in a company and its gross receipts, both of which can still be substantial. We have a large and dynamic economy.
I happen to agree with you that the US has shown a certain level of resilience. Surely, the oligopolies are more responsible for mismanaging wages, influencing market dynamics, and enabling inflation. And let’s not forget the government’s largesse in response to the pandemic (which, in my opinion are understandable and can be forgiven).
As much as I would like to think the US economy is resilient, the inflation and rate-cut cycle is far from over. It’s likely, I think, that we’re still early in the game. I think that what we saw yesterday closely resembled the onset of true capitulation. I’m definitely getting a sense of riding a roller coaster at the amusement park.
Hang tough at your 10-person shop. The business cycle will resolve. Of course, I’m hoping we don’t splash too much cold water on the US economy as we work through our troubles. But I’m actually more concerned about an expanding war in Europe and greater US engagement in it. And then there’s China too.
August inflation numbers out. TL|DR: Higher for longer.