In case you were wondering, the economy really did slow down again last summer. A spike of business failures in July led to a cooling trend in August, and by September there was a discernible chill in the air. Nowhere was this so keenly felt as in small business.
Dun & Bradstreet’s Small Business Health Index Report documents this new wave of recession in typically bland terms, but the numbers say what thousands of small business owners cannot — the second half of 2012 (and continuing into the current quarter of 2013) stunk for small business.
D&B define a small business as one with fewer than 100 employees. Tracking that group of businesses, they found slight improvements in numbers of businesses with past due credit card balances and delinquent bills, but nevertheless, an increasing number were failing. In fact, the failure index cited in the December 2012 Dun and Bradstreet report moved an “eye-opening” 6 points in the wrong direction after a similar 9 point move in July, “raising more concern for small business stabilty.”
Needless to say, confidence among small business owners has dropped and remains at record lows. The National Federation of Indendent Business breaks down the confidence numbers showing little expectation for improvement in economic growth or future earnings as of January 2013.
One disconcerting facet to all this is how broadbased the slowdown has been. The initial hit in July was felt in all sectors, according to D&B. No one was excempt. But by December, only two sectors were showing small improvement, specifically real estate and business services. Everyone else, according to D&B, has been “stagnant.”
What stagnant would indicate in this context is that no one has any money. Consumers weren’t (and aren’t) buying, hitting retail, manufacturing, and automotive. Companies who sell products to small businesses, such as Staples, did especially poorly but even Walmart reported that February 2013 was its worst in seven years. Other sectors have been hit as the slowdown rippled through.
An economy without money can’t function, or at least not well. Unmet demand along with idle supply is inefficient and wasteful. And yet here we are with just that. Many people need lots of things that small businesses would love to supply but the essential go-between, the medium of exchange by which people who need goods and services can obtain them from suppliers, is itself in short supply. And so, as a result of this lack of money, labor goes unused, inventory sits, people go hungry, businesses go under, and the cycle perpetuates.
All this misery for the lack of a little piece of green paper — it makes little sense by any logic, but when viewed without the murky shroud of economic jargon and political spin, it seems almost tragic to ruin the country and even the world over money. After all, we human beings invented money to serve us and make our lives easier, not to enslave and impoverish us.
Misery loves company and it should be some small consolation to know that more small businesses are struggling than not these days. But the impact of that realization is only temporary. What remains is what to do about it. Dun & Bradstreet doesn’t say in its report — they save that privileged info for paying customers.
No matter. In the end, it’s up to us to figure out a way to rise above the tide and survive. After all we’re Americans, inventors of can-do spirit, descendants of pilgrims and pioneers. If anyone can do it, we should be able to. So while the tried and true may not be working anymore, perhaps there are other, more creative ways to keep ourselves afloat while Wall Street plays out its string. We have little choice. Something has to be done to keep some semblance of economic life going on Main Street, here and in communities across the country where people — not numbers — live.
NFIB: Small-Business Owner Confidence Barely Budges – The New Year begins with low expectation for future growth
The Big Picture – Summary of Week’s Events (February 15, 2013)