We all see the same government-supplied numbers on the U.S. economy each month — the jobs added, the unemployment rate, the Fed's interest rate. But what those numbers mean to your small business is often quite different from what they mean to the business next door, to Exxon or to the economy as a whole, especially in a presidential election year.
Case in point: the massive surge of 287,000 jobs added in June. Commentators have contrasted that to the meager 38,000 added in May, and compared it favorably to the nearly 240,000 monthly average of jobs added over the last two years, which has cut the jobless rate in half since the worst of the recession.
And in a macroeconomic sense, it's good to have more people working and earning and spending. Yet all this hiring can make the labor pool pretty shallow. It might cost your business thousands of dollars in raises and incentives to retain valued employees, and thousands more to recruit additional hands.
The robust hiring could also fuel the economic debate as Republicans and Democrats each hold their political circuses — or if you prefer, their presidential nominating conventions — later this month. I expect both parties will seek to take credit for the booming economy if it continues to boom, or will blame the other guys if it stops booming.
I can't see anything on the horizon that would indicate a stifling of the current boom. And plenty of encouraging signs it will continue:
- New claims for unemployment benefits have stayed at keel-scraping levels.
- Consumer spending is strong.
- The Federal Reserve has put off any decision to raise interest rates.
- The manufacturing and service industry indexes have jumped.
- The S&P 500 on July 11 broke the record high it held for more than a year.
- And a final fact that somehow is seen to be a good thing, the number of unfilled jobs, 5.8 million in April, is at a record high.
Small businesses can find encouragement in this economic good news. Just as a rising tide lifts all ships, a growing economy gives every business an opportunity to get bigger.
Exit Brexit
Despite the rumbling herd of commentators who expressed fear of the end of Western Civilization if the United Kingdom pulled out of the European Union, it turned out to be a blip in the timeline — just as my favorite contrarian economist, Ben Stein, had predicted.
"People said there would be a crash," he wrote in the Spectator. "There would be a worldwide recession. It would be a disaster for Europe and for Britain and for the USA. But why? The tariffs that were in place on Thursday morning are still in place. There will be no serious movement in terms of trade for months if not years.
"Even if there is a breakup of the whole EU, which could happen, each country in it will still need to import coal or hides or rubber or software or whatever they import today. There will be no stoppage of trade."
The Brexit decision wasn't primarily about trade or any other economic factor. Immigration was a primary factor, as revealed by recent UK polls. One poll showed 45 percent of Brits identified "immigration/race relations" as the most important issue facing the nation. A second poll showed that 77 percent of Brits believed immigration should be reduced.
Since third-world immigrants provide able workers and tend to have large families, success at assimilating immigrants may become a key to future growth and productivity for staid, aging first-world countries.
Paul Zukowski provides a monthly economic report that gets past the boring stuff with a little humor and a lot of insight. His goal is to equip you with the economic analysis tools you need to help keep competitors from eating your lunch.
