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Washington Times

The real reason why small business economic expectations are at a 48-year low

By May 18, 2022No Comments

(This article originally appeared in the Washington Times)

This month the National Federation of Independent Businesses said that confidence among small businesses reached a two-year low in April, with the percentage of business owners expecting better business conditions over the next six months falling to the lowest level recorded in the organization’s 48 years of doing the survey.

The reasons you’ve heard before: inflation and labor shortages. But these reasons mask what this survey is all about: confidence, or lack of it. It’s not just because inflation is high and skilled labor is hard to find. Our pessimism is really because we have lost confidence in both the leaders and institutions that are not only causing these problems but also failing to fix them.

We have lost confidence in our president. He talks about solving supply chain shortages and spiking energy prices. But his solutions — which have included sending more money to the ports and releasing strategic oil reserves — are not fixing the root causes of inflation that his administration is creating. We watch as he stifles our country’s oil industry with excessive regulations and limitations on production. We watch as he lets his party push for more spending on top of the trillions of dollars of stimulus funds already washing around in our system, creating too much supply of money chasing too little demand and providing too many incentives for workers to stay at home. We watch as he lets his economic advisors waffle on implementing tighter monetary policy for fear of how Wall Street will react.

And what about those ineffective economic advisers? Small business owners ask how in the world could our nation’s top financial minds get things so wrong? How can our Treasury secretary, Fed chair, and the smartest academics and economists be so off in their inflation predictions? Blame Ukraine? Shanghai? The Long Beach California ports? That’s easy to do. But conflicts happen, trade disruptions occur and most of our largest trading partners in Europe and North America have long been open for business. There’s no way that a lockdown in China or a war between two countries that together represent less than 20% of the size of the entire U.S. economy could — alone — have such a dramatic impact on prices across the board. Experienced business people recognize excuses and incompetence. We know that these issues only exacerbated our too-easy monetary policies that are at the root cause of our inflation problems today.

We’ve lost confidence in our media that, depending on the outlet you read, only reports on the news you want to hear peppered with adjectives and phrases that trigger your right or left-leaning tendencies. We’ve lost confidence in our public health officials who operate in a vacuum of creating fear and mandates based on incomplete or inaccurate data without taking into consideration all of the economic and social consequences of their decisions. We’ve lost confidence in our academic institutions, many that (still) don’t allow their students to remove their masks in a classroom and suppress free discussions.

Most importantly, many of us have lost confidence in our ability to elect moderate and reasonable political leaders that will work together to solve our nation’s economic problems. Instead, we get inundated with candidates who wave guns, hug former President Donald Trump and criticize any of their opponents who show the slightest sliver of respect for or compromise with our current president (God forbid!). Or candidates that support putting tampons in boys’ bathrooms, magically forgiving student loans, physically threatening Supreme Court justices, defunding our police, and erasing the memories of our country’s historical figures due to their behavior that was the norm 150 years ago but today is now considered to be unacceptable.

All of this is behind the historically low forward confidence of our nation’s small business owners, who contribute to half of our economic output and employ half of our workers. It makes us cynical, pessimistic and sad. Today is not a great economic environment, and with the way things are going, tomorrow doesn’t look much better.

But it’s a fixable problem.

That’s because an economy is all about confidence. When small business owners are “feeling” better about their financial livelihoods, they invest, hire, expand and take more risks. When we know that our leaders are not afraid to make hard decisions — raising interest rates more aggressively or allowing more oil production for example — that will cause short-term economic or political pain in return for longer-term stability, we become more confident in the future. When we see our leaders working together to prioritize their attention on economic problems like excessive regulations, immigration, taxes and investments instead of arguing over guns, abortion, transgender rights and whether or not I can vote at 3 a.m., we become more confident that they are focused on the issues that more impact the financial security of ourselves and our families.

But that’s not happening. Instead, we get political squabbles over social issues that, while important, are not as important as rising prices and jobs. We watch the markets — and our household wealth — fall. We watch our leaders pursue sound bites over policy. We see a nation distracted by who’s wearing a mask on a plane, whether or not he or she is a “they” or what Elon Musk will do with a social media platform that less than 10% of the entire population actually uses on a regular basis. Who cares?

What’s really important is the economy. So unless our leaders, media and institutions really focus on those economic issues that impact us all, then business owners like me will continue to check our confidence in the future at

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