The United States may be in a recession, but small businesses don’t know it | american small business

Are we in a recession? Because if we are, it’s very strange.

Of course, we had two quarters of negative economic growth. Manufacturing demand is falling. Activity in the construction and housing markets has slowed. Tech companies are contracting. Financial services and real estate companies lay off workers. Inflation and energy costs remain stubbornly high, interest rates are rising and the stock market is down 18% year-to-date. Just Google “recession” and you’ll find the housing market is in one, big banks and investors are warning of it and Europe is heading for one. Over 80 financial advisors say a recession is “coming” and one big investor believes it’s going to be a “whopper”.

But wait a moment.

We may be in a recession. Or maybe it’s coming. But when there are recessions – or even the strong prospect of a recession – companies lay off. That’s not the case, is it? Hiring continued to increase. The unemployment rate remains at historically low levels. Job vacancies are near a record high. And here’s the real shocker: The majority of small businesses in the United States — which employ more than half of the nation’s workforce — aren’t just looking to hire, but are struggling to find employees, according to recent responses to a survey published by the National Federation. independent businesses and employment data from HR firm Paychex.

“Small businesses are still not showing strong recession signals,” Paychex’s CEO told CNBC last week.

So why are companies – especially small businesses – looking for workers instead of laying them off?

First, it is becoming increasingly difficult to generalize about the US economy. There are 350 million people and 30 million small businesses in this country. Our economy is still 60% larger than China’s and larger than Japan, Germany, UK, France and Italy combined. California’s economy is larger than India’s. New York’s economy is larger than Canada’s.

You can’t just say “we’re in a recession”.

At any time in the United States, some industries and regions are doing better than others. Construction, financial services and manufacturing are struggling. The energy industry too. But given employment earnings since the pandemic, business services, retail, transportation and warehousing are all the rage. The leisure and hospitality industry has lost the most jobs of any industry since the pandemic, but appears to be recovering. Alaska, New Mexico, New York, and Pennsylvania, for example, had unemployment rates above the national average, while states like Minnesota, Florida, and North Dakota had very high unemployment rates. down. A city where its largest employer is struggling will have difficulty with it. But the opposite is also true.

So is the United States in a “recession”? Judging from the top, the answer depends on who you ask.

The other reason most small businesses are looking to hire is that most small business owners aren’t stupid. Democrats will tell us that there have been historic job gains over the past two years, but we know that’s because the bar has been set at zero due to the pandemic. Republicans will warn of recessions and high inflation, but we know that these things are caused by a myriad of factors – European wars, Asian supply chains, and fiscal and monetary policies right here in the United States – and that these factors will eventually resolve, although perhaps not as quickly or as far as we would like. We are not fooled by politicians or rhetoric. We live this reality every day. And our reality is that – for the most part – demand remains relatively strong.

And if there’s one thing I’ve learned, it’s that my smartest customers, those business owners who’ve been doing what they’ve been doing for decades, if not generations, always look to the future. . They’re not thinking so much about 2022 right now or even the first half of 2023. They’re making plans and investments for 2024 and beyond. They know they have people – customers, partners, employees (and their families) – who depend on them for their livelihood. Like me, they don’t see huge bubbles and economic catastrophe on the horizon. We can be wrong, of course. But we are placing our bets now for the future.

And we always know that people are our most valuable asset. Of course, many companies are replacing low-skilled workers with robots and automation. But nothing can replace a qualified employee who excels at his job. Find me someone like that and I’ll hire that person whether or not we’re in a recession. I know that, if treated well, this person will add long-term benefits to my business, regardless of the short-term investment.

So no, we are not in a recession. And yes, we are in a recession. And no, we are not hiring. But yes we are. You can do the case anyway. That’s what people do. They are right. They are wrong. Discuss. Meanwhile, smaller companies that are either in strong industries or in growing geographies will continue to hire. And even those who aren’t won’t pass up the opportunity to invest in good people when things do turn around.

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