A lot of small business owners in America are notoriously susceptible to GOP supply-side macroeconomic propaganda.
Before anyone gets irritable with me, I didn’t say all small business owners are gullible. I said a lot of them are. And I say that with confidence, having interacted extensively with small business owners across the American South over the past 20 years.
If you tell them the truth — which is that Republicans have a far worse historical track record when it comes to managing the US economy than Democrats — they don’t so much chafe as turn quizzical.
By and large, small business owners are genuinely unaware that supply-side economics, based as it is on a set of wholly fantastical assumptions, simply doesn’t work. Or not very well, and not reliably.
Alas, small businesses’ willingness to accept reheated supply-side gimmickry will never dissipate, even if their faith in individual politicians might.
That’s the context for Tuesday’s NFIB headline. Typically, I don’t cover the small business sentiment release because — sad as this is given that small businesses are the lifeblood of the US economy — no one gives a damn.
Not even during the earliest days of the pandemic, when small businesses were threatened with literal extinction only to be rescued by, of all people, Steve Mnuchin, did NFIB coverage garner any semblance of interest from readers.
The only time I’ve succeeded in generating some reader attention around the survey was when it jumped the most on record following Trump’s reelection. With that in mind, consider the figure below.
As you can see, Tuesday’s update found the marquee gauge of small business sentiment in America erasing almost the entirety of the “Trump 2.0” bump.
As a reminder, the long-term average is 98. The headline briefly slipped below that threshold in April of last year (when Trump announced his tariff blitz) before recovering. It’s been sub-98 since the war began in March.
“Despite the enthusiasm around AI, the overall picture is divided [as] many small business owners are struggling with significant and unpredictable hikes in fuel prices,” long-time NFIB chief economist Bill Dunkelberg said Tuesday, adding that it’s “more challenging for small businesses to pass on [input cost increases] to their customers compared to their larger corporate competitors.”
I’ll just leave that there. Anything else I’m inclined to say would be even more gratuitous than the title.
Around here, the talk is more about high gas and diesel prices, choppy and uneven demand (not yet broadly bad demand), and shrinking profit margins.
AI strikes me as ‘supply side’ economics. Somehow we are all going to have to make sure those AI infrastructure investments earn a good rate of return. I’m retired and AI doesn’t offer me much at this point, except maybe in the area of my health. I don’t see that it’s going to offer the small business owner much either. There is plenty of speculation that AI might eliminate jobs. If it does, who’s going to pick up the tab on the huge infrastructure bet.