Hand-wringing about the possibility of an economic recession is very popular in today’s left-wing media environment. This speculation is inherently flawed if it only considers the Wall-Street-half of the economy.
To provide more accurate insight and meaningful predictions, pundits would do well to also (and always) consider and speak about the strength and importance of the other half of our economy: Main Street.
It is easy to feel pessimistic when Wall Street metrics soar or tumble based on the news of any given day. But while the stock market spikes and dips, small business – which is responsible for half of GDP and creates most of America’s net new jobs – is steady and doing great. Small-business owners are feeling great about the future, too.
Perhaps the hand-wringing pundits don’t know what they don’t know. Learning more about the small-business sector and its tremendous economic importance would make financial reporting more accurate and more complete.
There is truly nothing “small” about small business. Made up of millions of independent, locally owned firms, the small-business story is one of American economic stability and lasting strength.
Main Street is in fact what has always made America’s economic foundation stronger than the rest of the world. Financial analyst types might want to think of America’s multitude of smaller businesses as a diverse portfolio – there is more safety and long-term predictability to be found in a massive group of small firms than there is in a smaller group of really large ones.
To illustrate the current outstanding health of the small-business sector, a few facts:
A Small Business Index conducted quarterly by MetLife and the U.S. Chamber of Commerce revealed, last month, that small-business owners are highly confident about their local economies and their financial future. In fact, the overall score of the third-quarter Index was the highest since the inception of the study. Nearly 30 percent of the business owners surveyed said they plan to increase their business’ staffing in the next year.
It is easy to feel pessimistic when Wall Street metrics soar or tumble based on the news of any given day. But while the stock market spikes and dips, small business – which is responsible for half of GDP and creates most of America’s net new jobs – is steady and doing great.
Another prominent indicator of small-business economic health, conducted monthly by the National Federation of Independent Business, has been at historically high levels since 2017. The NFIB index considers small-business sentiment (optimism) as well as factors like capital outlays, sales, pricing and plans to hire. In August, NFIB reported that 28 percent of business owners were planning capital outlays in the coming months. A similar number reported their No. 1 problem was finding qualified workers – in other words, their greatest challenge had to do with keeping up with their own growth and success.
When considering the historic growth and optimism happening on Main Street, it seems irresponsible for pundits and journalists to continue painting a pessimistic economic picture. Are they unaware of the economic importance of small business, or do they actually want the economy to falter, for political purposes? A recession would damage President Trump’s chances of re-election.
Perhaps the hand-wringing pundits don’t know what they don’t know. Learning more about the small-business sector and its tremendous economic importance would make financial reporting more accurate and more complete. More talk about small business – including the sector’s current growth, historic optimism and overall strength – might even change some minds about the threat of recession.
Hector Barreto is the chairman of The Latino Coalition and the former U.S. Small Business Administrator.