Friday, September 10, 2010

[Video] CNBC: Sageworks CEO: Small Business in Worse Shape than Government Figures Indicate

It is obviously much more difficult to find data on small business, as most of it is private, as opposed to larger corporations who generally dominate the public markets.  But by simply using common sense, reading about credit conditions & banking reports that services this market, as well as confidence studies, it is clear to everyone but the federal government that small business is in general struggling.  If you listen to the government, there has been no slowdown in hiring throughout the entire Great Recession as countless jobs are being created in small businesses across the land. [Jan 27, 2008: Monthly Jobs Report & Birth Death Model  Of course if you detach from the Matrix, reality is a little different than that.

Below we have video from a firm who took the time to do the homework, and their conclusion is similar to that offered on FMMF's virtual pages; that is, small business is struggling, and the government hocus pocus reports are overstating reality.

[4 minute video]

With that said, the stock market ... and specifically S&P 500 companies... are geared to the largest end of U.S companies, and many are receiving much of their revenue away from the U.S., plus have access to a flood of liquidity via the debt markets especially, hence are enjoying life in a parallel universe.  This dichotomy is striking because small business is the driver of job creation, whereas many people are trying to gauge the health of the U.S. economy by a cadre of multinationals who essentially have no national identity anymore.  They are international amoeba.

Ironically the 3 areas of 'strength' in small business highlighted in the report are (a) drinking [seriously] (b) the 2 parts of the U.S. economy I call 'pseudo' private - where all the job creation has been the past decade, simply because it is being run as a big ponzi scheme - education and healthcare.  As I wrote in April 2008  [Apr 2, 2008: The Underemployment Rate is Rising]

The major job creators in America, instead of say "making stuff other people want" or "creating intellectual property" are instead healthcare and government. The VERY two things that are slowly bankrupting the country
We have 2 huge beaurocracies - federal government and healthcare. To keep the government from going even more insolvent we should in theory be cutting jobs from these 2 white elephantsHealthcare costs spiral out of control and we hire more people - I believe healthcare is now 16% of GDP. But how do you cut costs without cutting jobs? Thats the other dark secret - most of our recent gains in jobs are either government or healthcare related.
They are sapping our national wealth away by their huge excesses/costs BUT they also provide the main job growth as well. As with everything my expectation is the "kick the can down the road" theory will continue - keep growing these massive bureaucracies(create more jobs and costs now) and let another generation pay for it.

Bottom line, the organic private U.S. economy is flailing and has been for years (covered up by bubble creation by the Fed)... only where the government is funneling huge amounts of taxpayer money (government or pseudo government sectors) do we create 'prosperity'.  That should be an extremely troubling issue for those who look under the hood of what has happened to country, and people should be figuring out the root causes - instead we are simply doing the same thing... but bigger..

Actually this study by Sageworks is a perfect fit for where the strength has been the past decade...  healthcare, education, and drinking have led the country the past decade as well!

IndustryChange, May 1999-2009

(thousands of jobs)*

Private healthcare2898
Food and drinking places1567
Gov educ1390
Professional and business services885
Gov except health and ed843
Social assistance796
Private education772
Arts, entertainment, and recreation188
Gov health148
Financial activities130
Transportation and warehousing-43

*Gov health and gov educ based on April 2009 estimates
Data: BLS

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