Please don?t tell me that the American economy is moving in the right direction, however slowly, which I hear from politicians and commentators all the time. It isn?t. Not even close.
Key economic metrics offer no encouragement at all -- the two big ones, GDP and unemployment, are both woefully inadequate, regardless of what people say. Sure, unemployment as measured by the Department of Labor has gone down, but this is only because the denominator of how many are in the workforce has decreased and is really low as a percent of the population. Meanwhile, GDP will have grown only 1.9% in 2012, which is pathetic. After a serious recession, the economy historically gets one big bounce. It hasn?t happened yet.
The reason the U.S. economy is stalled like this, in my view, is that our elected officials, from the president, to Congress, to governors and mayors, are focused on the wrong things. They?re concerned about government spending on infrastructure, schools, police, firemen, and the military -- on government jobs and projects of all types. They?re fixated on pensions and benefits -- on how to spend money, not how to create wealth.
What they should be focused on is revving up the engine that fuels most of the American economy: small business. And right now, small business desperately needs a jump-start. U.S. small-business owners are pulling back on how much they invest in their businesses, with their net capital spending intentions for the next 12 months now at the lowest level in more than two years, according to the Wells Fargo/Gallup Small Business Index. Small-business owners are also increasingly pessimistic and plan to hire less in the next 12 months.
What?s more, in my estimation, we need a minimum of 2 million startups per year to keep our economy pumping and creating new jobs, but we're currently running at roughly 400,000 annually. This doesn?t bode well for the future of the U.S. economy, which depends on a thriving small-business sector for most of its employment and GDP growth.
It?s clear to me and to millions of other executives that when small business slows, America slows. And if small business goes the way of the bison -- slowly but surely dying out -- the country?s economy will die with it. But I?m not sure the president, Congress, governors, or mayors really know this, or they?d be responding to the decline of small business like the five-alarm fire that it is. Yet they?re not.
Now, imagine if President Barack Obama took the podium and said, ?From this day forward, I am first and foremost the President of the United States of Small Business.? Sure, he alienated many businesspeople with the ?you didn?t build that? line during the campaign. But he?s smart and could easily recover from that remark, by pledging his allegiance to small businesses and by telling them, in one of his trademark stirring speeches, ?I will do everything in my power to help you succeed, to remove any barrier you may face, and to help you once again become the great American, job-creating powerhouse we know you can be.? I think this is the only way he can save the country.
And what if every governor and mayor followed suit and held a press conference in which they said, ?Today my primary role has changed to Governor or Mayor of Small Business??
If small-business owners? capital spending intentions are in decline, it?s because they probably believe they?re in trouble. They may feel that way because they don?t believe national and local leaders honestly respect them for the role they play as the engine of the U.S. economy. That has to change now.