Small business sales are the lifeblood of the economy. We have written previously about the importance of small businesses relating to employment, incomes, economic growth, and even the stock market.
- April 2020 – Previous Recession Warnings Now A Reality
- January 2021 – NFIB Send Strong Warning About Small Cap Stocks
- May 2021 – Data Says It’s Only An Economic Recovery
- June 2022 – NFIB Data Says A Recession Is Coming…Again
Since the last update in June, the NFIB Small Business sales and sentiment measures have only deteriorated further. Despite a surging stock market in July and August, along with suggestions the economy will avoid recession, the data continues to suggest differently if historical precedents hold.
For example, overall confidence expressed by the members of the National Federation of Independent Business (NFIB) owners is at levels that have historically correlated with deep recessions and bear markets.
Such should not be a surprise when we remember, as shown previously, that small businesses comprise a significant portion of the overall corporate economy and employment.
“According to the U.S. Small Business Administration, there are 28.8 million small businesses in the United States, and they have 56.8 million employees. Small businesses (defined as businesses with fewer than 500 employees) account for 99.7% of all businesses in the U.S. The chart below shows the breakdown of firms and employment from the 2016 Census Bureau Data.”
Simply, small businesses drive the economy, employment, and wages. Therefore, what the NFIB says is highly relevant to what is happening in the actual economy versus the headline economic data from Government sources.