Biden Equals Big Problems for Small Business
Right now, a raging economic conflagration grows in our country, and one created entirely by Joe Biden.
Sadly, the just-released NFIB Optimism Index confirms that small business in America suffers a crisis of confidence. The National Federation of Independent Business is the broadest, most respected group in the country advocating for entrepreneurs and small business operators.
NFIB’s index declined to an 11-month low, and the trend suggests a total loss of the terrific momentum that Main Street enterprises enjoyed following the reopening of Summer of 2020 and into early 2021, at least in the red-state jurisdictions of America that managed virus risks reasonable and got back to work, school, and life.
The main culprit for the newly dour state of small business? Inflation. Right now, a raging economic conflagration grows in our country, and one created entirely by Joe Biden. More on inflation follows, but first have a look at the trends for the NFIB Index -- both the handoff that President Trump bequeathed to Joe Biden, and what this new administration has done ever since in mismanaging America’s economy.
This chart, sourced from TradingEconomics.com, depicts very unfortunate small business peak and rollover once Biden’s policies took hold:
NFIB INDEX – back one year
Within the details of this dreadful small business survey, the main driver of the despondency is clear: rising prices. Small businesses face a tough struggle here as they are generally consumers themselves of physical commodity goods, and not producers. For instance, most food and energy commodities at the wholesale level are produced by giant conglomerates, by multinational corporations. They can, and do, benefit from runaway inflation. But small businesses, by and large, find it very difficult presently to pass their increased input costs forward to consumers who are themselves, understandably, pessimistic (more on that point below).
In fact, this NFIB survey reveals a hugely troubling data point on inflation. The percentage of small businesses reporting a rise in prices surged to the highest levels seen in that survey since 1974. Ouch. Welcome back to the 1970s, and I don’t mean disco and satin shirts. Instead, in terms of economic stagflation, the unusual and toxic combination of decelerating growth with surging prices. The worst of all worlds economically. Biden’s apologists first tried to explain away soaring inflation as “transitory.” Now, many try to place blame elsewhere, as if this inflation explosion is just a force of the macro business cycle. But have a look at another chart and note the precise timing of the start of the price shocks:
CONSUMER PRICE INDEX - back 5 years
Inflation at 40 year highs resulted from 3 massive policy blunders from Biden. First, he declared war on American domestic energy production. Second, he and Chuck and Nancy embarked on a historic binge of borrowing and spending that sent interest rates – and inflation – spiking. Third, his onerous and unscientific mandates caused totally unnecessary supply chain issues, especially in key industries with a lot of vaccine-hesitant workers, like trucking and logistics.
Because corporate media always and everywhere runs interference for Biden, they have tried valiantly to paper over the bad news, and they incessantly trumpet the rare good economic data. For example, last week’s Jobs Report surprised to the upside for new hires. The headline number was good news, to be sure. But the devil is often in the details, and the granular case for the labor market remains very troublesome for two reasons.
First, even though we always welcome rehiring, workers also fall behind every single month because of Biden’s inflation. Real Wages, a measure of pay relative to broad price increases in the economy, have now declined for 11 straight months under Biden. If a worker’s pay increase cannot keep pace with surging prices for rent, gas, and groceries, then those citizens become poorer each month. This slog is the present harsh reality of Biden’s economy.
Second, the reliability of the government’s Jobs report numbers becomes a real issue. For example, the revisions to prior Nonfarm Payrolls reports have been massive. In this just-released survey from the Bureau of Labor Statistics, the total revisions to the last two months of November and December was a whopping +700,000 jobs. The December figure for new jobs more than doubled with the correction. Earlier in 2021, the BLS reported mammoth late changes in the other directions, revising 2 consecutive months downward by -800,000 jobs for June and July. In my 25 year Wall St. career trading these numbers in financial markets, I never witnessed such volatility in revisions.
What is going on? It’s unsure, but one distinct possibility is that the BLS, like so many federal agencies, is simple not really working, and asleep at the wheel. Anyone who has been to Washington lately to see the ghost-town like streets during workdays can recognize that while most of America returned to busy life…Washington remains at home, collecting the paychecks we provide.
But regardless of the accuracy of the reports from the government, we have plenty of data from private sector entities affirming the harsh reality of Biden’s economic quagmire. For example, the widely watched University of Michigan Consumer Sentiment survey sinks to beneath the lowest levels of the Spring 2020 lockdowns, a truly astonishing decline in confidence. In fact, that survey hit the lowest level in over a decade and Consumers grow weary of Biden’s inflation. Like the Small Business survey, notice the divergence here between the upward momentum Biden inherited from Trump and the current downward slump:
UNIV of MICHIGAN CONSUMER SENTIMENT – back one year
Thankfully, we have answers. I have posted many of them, and summarized the most important America First solutions here in this recent article from Real Clear Politics: https://www.realclearpolitics.com/articles/2022/01/04/america_first_has_answers_for_us_crisis_of_confidence_146979.html
Into the 2022 midterm elections, stay focused. Do not “major in the minors.” Inflation and Immigration…the two “I’s” will dominate the decisions for voters.