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Joe Biden Has A Small Business Problem
Small businesses in the US are feeling pretty glum these days. That's bad news.
As I never tire of reminding readers, small businesses comprise nearly half of private sector jobs in America. On the eve of the pandemic, they accounted for almost two-thirds of net new job creation since 1995, according to official statistics.
That's why it was so critical for the federal government to backstop small business payrolls during the COVID lockdowns -- even at the risk of rampant fraud (which happen
This article could have easily been an interview with me. Well, all but the ‘closed during the pandemic’ part, which looking back I wish I WAS closed and received payroll support, at least I would have had a break.
But yes, from the small business trenches, I can attest to the validity of these points. Ballooning debt payments, constantly worried about raising prices just to keep afloat versus alienating customers, generational demographic shifts in alcohol consumption, competition and commoditization by Uber & GoPuff et al, lack of corporate parties/events/gift giving….. I’m under constant stress and left wondering where it all went wrong.
I at least find escapism in reading superior market commentary and pretending that I have investable cashflow.
I’m a small independant IT consultant, who lost his last big contract a year ago just as the tech recession got underway. I haven’t had any customers to worry about in a year now. I’m fed up with not calling this a recession, whether or not the rigorous technical description applies. People are hurting. I talked to a recruiter today who got 1000 resumes for a single position. She’s been in the biz since before the dotcom crash and she said that didn’t compare to this year. I know I’ve seen, via a job site where they let you know how many people have applied, 270 people apply for a single senior position in my very narrow technical specialty.
At least misery loves company. Cheers.
I don’t know. Something doesn’t add up here. From the perspective of small business owners, I assume they want both lower rates and lower inflation. To suggest the Fed keeping rates high for longer doesn’t really help the owners, unless we’re willing to concede that doing so would translate into lower inflation. Sure, keeping rates high have bolstered the dollar to the best interest of the US, which is the largest importer of goods in the world. But commodities are rallying nevertheless against a fairly strong US dollar this year. It’s becoming increasingly clear that the US will eventually have to come around to the reality that inflation is higher now, say 3%, not the sacred 2% anymore. That means small businesses will have to come around to that reality too, irrespective of rates staying at 5% or 4%. So, in order to really help these small businesses, the Fed might as well cut rates as soon as possible, because the invert relationship between the US dollar and commodities has broken down. But if they still insist on a higher dollar, they might as well raise rates to 8%, like Jamie Dimon suggested. I don’t know if Dimon cares more about small businesses than Neel Kashkari. My guess is they both don’t care. Recall that the duo donned the hawkish hat in late September last year, when Dimon tossed around 7% on the same day Kashkari suggested in an essay that there was a 40% chance that the Fed has to hike rates meaningfully higher, say 6% maybe. At least Jerome Powell still cares.