Coming on the tail of the disastrous government response to the coronavirus, with its mandates, lockdowns, and job loss, economists fear that millions more will lose their jobs by next year as small businesses begin to fail in even greater numbers.
A June report from Kabbage, the small business lender owned by American Express, found that about 20 percent of small businesses don’t think they can survive the Biden downturn.
This looming small business crash coincides with a housing crisis, with soaring mortgage rates that have not been seen since the housing crash of 2008.
This is extremely bad news because small businesses are the engine of the U.S. economy.
There are about 31.7 million small businesses in the country, according to federal data, and those businesses are responsible for employing nearly half of America’s working population, or about 58.9 million workers, according to data reported by Pie Insurance.
The U.S. Small business Administration reports that 99.9 percent of all firms in the U.S. are small businesses that employ less than 50 people.
So, clearly, small businesses are extremely important to the health of the U.S. economy.
And the effects of the pandemic on small business were profound.
By June 2021, about 16 months into the pandemic in the U.S., some estimates found that one-third of America’s small businesses had closed either temporarily or permanently, PolitiFact found.
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But the effects of COVID are only the first wave of calamity buffeting America’s small businesses.
On Friday, CNBC tried to put a happy face on the situation, by declaring in a headline that “4 out of 5 small businesses say they can weather a recession,” but that doesn’t mean they are guaranteed able to withstand it, only that they think they might be able to do so.
And that also leaves 20 percent of small businesses worried that they cannot outlast the recession. And 20 percent of nearly 60 million American jobs means that 12 million jobs could be at risk.
As CNBC noted in that same report, small businesses are already hard-pressed as inflation cuts into their profits as supplies, store rent, insurance, and other costs soar in the era of Bidenflation.
Indeed, with COVID policies ending and more Americans trying to get back to regular life, CNBC said that revenues at small businesses grew by 87 percent. But because of inflation, profits still dropped by 4 percent.
Inflation is so bad that even former advisers in the Obama White House are warning of its ill effects.
Obama economists Lawrence Summers, who served as director of the National Economic Council during former President Barack Obama’s administration, and Jason Furman, the chairman of Obama’s Council of Economic Advisors, have both warned that inflation is a “serious problem” for the Biden administration.
And Federal Reserve Chairman Jerome Powell was blunt last week, warning that Americans are going to feel “some pain” with what the Fed decides it has to do in a desperate attempt to curb inflation. That pain comes in the form of the Fed breaking a 14-year record with the higher interest rates it has imposed.
Combine all this with a stock market plunge that has pushed the Dow Jones Industrial Average lower than when Biden took office, and wages that aren’t even close to keeping up with inflation, and we have serious trouble.
In all, Biden’s looming economic crash will seriously hurt the same small businesses that already reeling from the COVID pandemic and the draconian policies imposed to fight it.
And the pain could send tens of millions more Americans into the unemployment lines.
