The American Economy: What's wrong with this picture?

Jim Blasingame

For more than 17 years on my weekday radio program I’ve reported monthly on surveys by excellent researchers who reveal how small business owners regard current economic conditions.

Arguably the best example is the gold standard for such research, Dr. William Dunkelberg’s NFIB Index of Small Business Optimism, with a 42-year track record of monthly reports.  Also, for the past several years my own organization has conducted a weekly online poll of our audience on various topics, including a quarterly question about economic conditions.

Since 1973, ten elements of the seasonally-adjusted NFIB Index have combined to establish a baseline of 100 points, at and above which indicates overall optimism by small business owners. When concern, caution, fear and/or pessimism are more in evidence the number falls, sometimes below 100 points. Indeed, since 2008 the NFIB index has been stuck below the 100 point baseline, including several months of record Index lows, corresponding with the moribund national GDP during that period. And it must be noted that for 80% of this period the economy was technically not in a recession.

Now let’s look at five current economic indicators:

  1. Last month the March NFIB Index fell to 95.2. But there was something worse in the Index Dr. Dunklelberg told my audience he’d never seen in 42 years: All 10 Index elements were negative.
  2. In our most recent online poll, three-fourths of respondents reported business was either good, flat, or at recession levels, while barely one-fourth allowed business was very good.
  3. The week before the above poll, our question was about current small business challenges. Two-thirds of our folks reported their greatest impediment to success was either the economy or the government, specifically dysfunction, taxes and regulations.
  4. This week, Q1 2015 GDP came in almost negative, at 0.2%.
  5. Meanwhile, in the same quarter, both the Dow and Nasdaq reached new record highs.

It must be noted that the coincidence of essentially no economic growth (4) and record stock performance (5) is essentially a replay of Q1 2014, with both occurrences being at once bizarre and likely unprecedented. As I’ve often asked since 2010, what’s wrong with this economic picture?

Small businesses are the U.S. economy’s canary in the mineshaft – their experiences are the early economic warning signs and currently the signs are not positive. And not unlike a bird in a cage, these guys are planted in the ground on Main Street – nowhere to run or hide.

The United States in general and the Middle Class in particular need a thriving Main Street economy, which we haven’t had for almost a decade primarily for two reasons: 

  1. Anti-business policies and rhetoric coming out of Washington.
  2. Major corporations and Wall Street driving share price by financial manipulation rather than investing in the marketplace to drive profits and share price.

Write this on a rock … Wall Street, come back to Main Street. Washington, you can’t get golden eggs from a dead goose.

Jim Blasingame is the author of the award-winning boock, The Age of the Customer: Prepare for the Moment of Relevance.

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