Lack of Growth Due to Lack of Customers


Don Lee of the LA Times presents yet more pessimistic news about our anemic economic recovery:

In every recession over the last three decades, it has been America’s small businesses — those Lilliputian companies with fewer than 100 employees — that stepped forward, began hiring and pulled the country out of the mire.

Not this time….A host of factors — some well-recognized and others seemingly unnoticed in the national debate over economic policy — are converging to restrain small-business owners from hiring. Among them:

  • Near-stagnant demand for goods and services as a result of consumers’ reluctance to return to their free-spending ways.
  • A disturbing falloff in the creation of new small businesses.
  • The devastation of the real estate market.
  • Uncertainty about the economic outlook at home and abroad.

….The fact that many small firms are seeing little increase in demand for their services and products is decisive for Scott George, owner of Mid-America Dental & Hearing Center, which employs 55 people in the southwestern Missouri town of Mount Vernon.

“I’m not having any trouble getting money,” said George, who recently got a $250,000 loan to renovate one of his buildings. But he’s not hiring more workers because of little or no growth in sales.

As it happens, I’ve read conflicting evidence about whether or not it’s really small businesses that are usually the engines of job creation when the economy comes out of a recession. It seems to vary with the recession, and in any case the net difference between job creation in small vs. large businesses appears to be modest. Still, most of what Lee says here applies to large businesses too: lack of expansion right now is due less to credit woes than to simple lack of demand. Until consumers start spending again, economic growth is going to be weak. But what’s going to get consumers spending again?

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

Share your feedback: We’re planning to launch a new version of the comments section. Help us test it.