PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

August Jobs Report Keeps the Good Economic News Rolling In

By at 7 September, 2018, 4:09 pm

NEWS 

FOR IMMEDIATE RELEASE 

Washington, D.C. – Today, the U.S. Labor Department reported that payrolls increased by 201,000 and wages by 2.9 percent in August.  According to Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan, the continuous string of solid news on the economy should not be a surprise given that policies advanced over the past 20 months continue to inspire confidence and encourage investment and risk-taking by businesses and individuals.

“This vibrant economic period is positively reaching many more people, and is the direct result of policies that have unleashed widespread confidence and positive actions by entrepreneurs and businesses. Consumers and workers are responding, and the uptick in business investment will help sustain growth. Policies need to continue to move in a direction that lift barriers to capital formation and access, and reduce business costs so that wages can continue to grow.  There should be no backing down from a pro-growth policy agenda, and we are pleased that Congress and President Trump continue to push forward,” said Kerrigan.

Kerrigan noted that health coverage costs are a drag on wages, but is hopeful that recently implemented reforms (for example, Association Health Plans and other regulatory changes that will increase choice and affordability in coverage) as well as other initiatives on the horizon will reduce these costs.  She expressed optimism that the Senate will soon follow the House and pass the massively bipartisan “JOBS Act 3.0,” which is big package of bills to improve capital access for entrepreneurs and small businesses. Kerrigan also said that finding qualified employees and filling job openings remain a challenge for small businesses. She expressed hope that sustained economic growth, higher wages, and the focus on workforce training and education, such as the President’s “Pledge to American Workers” initiative, will create a favorable environment and the needed incentives to bring more people back into the workforce.

“Too many Americans were drained and scarred by the Great Recession, but strong economic growth and the willingness of employers to provide extensive training and opportunities for advancement will work together to bring more people off the sidelines. Small businesses especially need a greater supply of workers, so they can take advantage of growth opportunities in the current environment. Fortunately, entrepreneurs continue to receive good news on the federal policy front that will help them address various human capital challenges and provide employees with the benefits they need,” said Kerrigan.

Last week, for example, President Trump signed an Executive Order to make retirement plans more affordable and less cumbersome for small businesses to offer.  A similar action was taken on Association Health Plans (AHPs), to provide the self-employed and small businesses with more affordable options in health coverage, and on short-term limited-duration plans.

The solid news on job growth for August follows other pieces of good economic news over the past week or so that points to sustained growth moving forward:

The Streak in Personal Income Growth Continues 

The July personal income report from the U.S. Bureau of Economic Analysis (BEA) released on August 30, continues a streak in growth which reinforces the growing strength of the U.S. economy.

Since July 2016, real per capita disposable income experienced growth in 23 of the last 25 months with now 13 straight months of growth, rising from $42,726 (in 2012 dollars) in June 2017 to $43,769 in July 2018. As noted by SBE Council chief economist Ray Keating in his analysis of the July BEA report: “Rising disposable income is good news for investing, saving and consuming – a positive trio for the U.S. economy.”

Productivity Performance the Best Since 2015 Q1

The Bureau of Labor Statistics (BLS) September 7 second quarter productivity report (revised only slightly from the preliminary estimate in mid-August). Specifically, productivity rose by an annualized 2.9 percent rate, the best productivity performance since the first quarter of 2015, and a big step up from 0.3 percent in the first quarter and -0.3 percent in the fourth quarter 2017. In Keating’s analysis of the productivity data, he notes that productivity growth “has been one of the big trouble spots for the economy over the past decade.” He explains why it is important and how pro-growth policies are fueling productivity growth.

Revised Q2 GDP (4.2%) Driven by Strong Business Investment

On August 29, the BEA released its second estimate of second quarter GDP on August 29th. The topline revision of real GDP growth was positive, with the second quarter growth rate estimate moving from 4.1 percent to 4.2 percent. In a review of this data, Keating observed that strong business investment (revised up from 7.3 percent to 8.5 percent in the second quarter) was a key component of this upward revision.  Strong investment by business means entrepreneurs are confident, such investment will help to strengthen productivity and wages.

Small Business Lending on the Upswing

The Federal Deposit Insurance Corporation’s (FDIC’s) latest quarterly banking profile (released on August 23) shows that Community Banks are performing well, which is good news for small business lending. In fact, small business lending has been on the rise with, according to the FDIC report, small commercial and industrial, and nonfarm nonresidential (properties) loan balances at $632.5 billion in the second quarter. That was up from the end of 2017 ($623 billion), and compared to $618.7 billion a year earlier. Though still below the pre-recession high, small business lending is moving in a positive direction.

CONTACT:

Karen Kerrigan, kkerrigan@sbecouncil.org   

SBE Council is a nonpartisan, nonprofit advocacy, research and education organization that works to protect small business and promote entrepreneurship. For nearly 25 years SBE Council has worked to successfully implement a range of policy and private sector initiatives to strengthen the ecosystem for startups and small business growth. To learn more, visit SBE Council’s website: www.sbecouncil.org. Follow on Twitter: @SBECouncil

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