While many financial commentators got excited by the 5 percent economic growth rate for the third quarter, the fastest pace in 11 years, the picture isn't so pretty for small business, says communications consultant Jean Card.
"The small business half of the economy is only just starting to peek its head above water," the former speechwriter for the secretaries of Labor and Treasury writes in U.S. News & World Report
"The American economy (GDP) is comprised of two equal halves — a big business half and a small business half. Many folks don't realize that the small business half really is as significant as the big business half."
Card notes that the National Federation of Independent Business (NFIB)'s small business optimism index is still below its historical average before the Great Recession. "We are in the midst of an historic decline in business dynamism," she says.
Big business may be strong now, pushing GDP upward, but small business accounts for about two-thirds of job creation, Card explains.
"If small business were doing as well, the recovery would have included far more job creation at this point." Non-farm payrolls rose 321,000 in November, the biggest gain in almost three years.
"Economic imbalance increases economic risk. The more our economy relies on the big business half, the more we are all exposed to stock market ups and downs. Not cool."
To be sure, the NFIB small business optimism index
surged 2 points to 98.1 in November.
"Expectations for business conditions six months out rose a huge 16 percentage points while expectations for real sales volumes rose 5 percentage points," Bill Dunkelberg, NFIB chief economist, said in a statement.
"Unfortunately, the index did not sprint past the average which is typical of a strong recovery before settling back down. Instead it's been a slow slog just to reach this point. It's a little early to declare a breakout. . . . But it's a good sign that comes at a good time for small business."
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