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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Small business
July 19, 2012 at 10:15 AM

A scary entrepreneurship collapse

The Great Recession and its financial crisis put a big dent in the ability of entrepreneurs to raise start-up capital. But the problem runs deeper than the damage caused by the downturn, according to studies by the Ewing Marion Kauffman Foundation. According to Washington Monthly, one report last summer the number of “business births” peaked before the recession before dropping 27 percent in three years. Then:

This spring Kauffman followed with a second report that was in many ways even more dire. Compared to a generation ago, the report said, it is now much harder to start a business in America and keep it running. In 1980 “young firms”– those less than five years old — accounted for almost half of all going concerns. By 2010, their share of the total had collapsed to less than 35 percent. And as the Kauffman authors made clear, this doesn’t only mean less opportunity for America’s entrepreneurs. It also means millions fewer jobs every year, and much less economic growth.

In reality, it appears the situation is even worse, missed or distorted by conventional measures, and business formation has dropped dramatically over the past generation. According to authors Barry Lynn and Lina Khan, “America really is undergoing a radical change in the structure of our political economy. And yet this revolutionary shift of power, control, and wealth has remained all but unrecognized and unstudied by the mainstream media, Capitol Hill, the White House, state legislatures, and both party machines.”

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Comments | More in Entrepreneurship, Small business

May 30, 2012 at 9:57 AM

Some small glints of optimism from small business

Small-business owners, some of the worst hit by the Great Recession, are feeling a bit more optimistic, according to a new survey by U.S. Bank. A total of 37 percent of Washington respondents said the state economy was stronger than the nation’s. That compares with only 5 percent in Oregon and 7 percent in Arizona. The national average was 33 percent. But there are many caveats.

In answering the question, “Fewer believe the U.S. economy is still in recession,” “only” 71 percent said yes. That compares with 78 percent in 2011 and 89 percent in 2010. Better, but still an astounding number. And real, based on my conversations with small-business owners. The percent that think we’ll still be in recession next year: 85 percent. As for hiring, 18 percent of Washington respondents and 14 percent in Oregon expect to add jobs in the next year.

The bank surveyed 3,220 small-business owners (with revenue worth $10 million or less) in its 25-state operating area in March and April.

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Comments | More in Great Recession, Small business

December 2, 2011 at 10:00 AM

Vote: How have hard times affected your home business?

Unemployment dropped to 8.6 percent in November from 9 percent, but the economy only added 120,000 net new jobs. The U-6 “real” unemployment rate fell to 15.6 percent from 16.2 percent. The Wall Street Journal has a good explainer as to the why. The new jobs added were barely enough to keep up with the natural growth of the labor force, much less make up for the Great Recession losses. And, as the New York Times reports in a must-read story, few unemployed Americans have a chance of restoring their old income.

A reader suggests coming at unemployment from a different angle. She writes:

Ask questions that would bring to light those of us who, before the economic meltdown, were self-employed and had relatively successful full-time or part-time home-based businesses, and discover how many of us are now completely or nearly out of business but do not show up in the official head counts of the unemployed for various reasons. Many of us worked to supplement our family’s income, but were not the major breadwinners and so have simply stopped doing what we had been doing and have not applied for any kind of unemployment assistance, nor are we actively looking for other

jobs (they don’t exist, anyway). Even if the family’s main breadwinner is still employed, our total income has gone down and we are cutting back.

So, today’s poll:

My self-employment situation

Read on for the links of the week and the haiku:

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Comments | More in Jobs/Unemployment, Small business

June 14, 2011 at 9:23 AM

Small business confidence stalls

Wall Street is more confident for the moment but it’s not translating to Main Street. A small-business confidence survey fell in May for the third month in a row. The poll, by the National Federation of Independent Business shows optimism better than in the depths of the Great Recession, but still lower than at any other time since the survey began in 1986.

One in four owners surveyed cited weak sales as a chief concern. One in ten listed inflation. The average change in employment was essentially flat. Even though interests rates are low, capital spending is at a historic low. Also, a mere 5 percent of the small-business owners said this was a good time to expand: 71 percent of these worried about the weak economy, 14 percent about political uncertainty.

The NFIB leans conservative in its advocacy, so not surprisingly its economist Bill Dunkelberg cites “the growing debt, large deficits, threats of higher taxes, regulations being spewed out by state and local administrations, and the uncertainty of the new health care law” as key drivers behind the pessimism.

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Comments | More in Recovery, Small business

July 16, 2010 at 9:55 AM

Catch-up Friday: King Co. biz survey, wealth inequality, cities and offshoring, and more

Catching up:

— The Greater Seattle Chamber and 30 business organizations and government agencies are undertaking what they hope is an extensive survey of conditions for employers in King County. The Job Sector Survey will collect data on sentiments, challenges and aspirations of businesses. Go here to learn more and take part.

— Business Insider offers “15 Appalling Facts About Wealth and Inequality in America.” Among them: the gap between the top 1 percent and everyone else is wider than at any time since the 1920s; the top 1 percent owns one-third of the country’s wealth, while half of America only owns 2.5 percent, and half of America owns only 0.5 percent of the country’s stocks and bonds.

— You think the iPhone 4 is Apple’s biggest problem? Umair Haque in the Harvard Business Review writes a provocative piece about the real vulnerability of Steve Jobs’ baby:

So Apple’s Achilles heel is this: It’s part and parcel of what you might call a global Ponziconomy. That’s one where businesses do better by doing bad. There, companies compete to make some people better off by making others worse off. Like Bernie Madoff’s returns to investors were largely illusory, so the benefits offered by a Ponziconomy are often simply fictional — as we’ve discovered the hard way over the last couple of years or so.

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Comments | More in Income/living standards, Jobs/Unemployment, Macro/Big picture, Outlook, Small business, Tech economy, Working America

July 12, 2010 at 9:50 AM

The recession lingers painfully for small business

Today’s economic laff riot comes from Fed Chairman Ben Bernanke, in a speech calling for more lending to small businesses. “Small businesses are central to creating jobs in our economy,” he said. “They employ roughly one-half of all Americans and account for about 60 percent of gross job creation.”

What Bernanke didn’t mention is this sobering stat from the Census Bureau: Small business led the way in hiring after each of the three previous downturns; much of this came from companies with 20 or fewer workers. This time, small businesses aren’t hiring. It is, as the Los Angeles Times reported, “a historical change of major proportions.” Small outfits have closed in huge numbers, as Seattle neighborhoods can attest as they mourn many of their distinctive shops that are now shuttered.

The reasons are several, including the collapse of the real-estate market, moribund demand for goods and services, uncertainty and an ominous drop off in the formation of new businesses. Bernanke focused on another big issue, access to credit.

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Comments | More in Small business


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