I’m going to be heading into my first real job after college, and I have heard a lot of different views on the economy. Some people claim we’re heading into a recession while others claim that the market remains strong.
Does June’s job growth spell out hope for the future?
June’s surprising jobs growth took many analysts by surprise, leading business owners and investors everywhere to re-assess their opinions regarding the immediate future of the economy. While the market has been roaring upwards for years now, concerns about a forthcoming global recession continue to plague investors who aren’t entirely certain that employers will be able to sustain their levels of growth in the near-future.
According to the recent job figures in anADP report, certain sectors made out far better than others when it came to adding workers. Small businesses, for instance, weren’t always capable of cashing in on the same robust growth enjoyed by other, larger companies. This worrying trend spells out a grim future for the U.S. economy where mom and pop shops are concerned, especially as heightened geopolitical tensions essentially guarantee that ongoing trade disputes won’t be resolved anytime soon. Large businesses are still chugging ahead at full steam, and the health sector is obviously continuing its robust growth, but weaknesses elsewhere could prove to be long-lasting and spread to other sectors.
Given that the Federal Reserve is angling to cut interest rates next month, however, there are still reasons to believe that the market’s bull run will endure. The president’s ardent support for a nominee who’smore likely than not to slash interest rates even further could very well bolster economic prospects across the country for some time, but how eagerly small businesses respond to lowered rates would be crucially important. When it comes to supporting long-term growth, though, officials should perhaps be paying less attention to the stock market and instead put a greater focus on small businesses and budding tech sectors which show immense promise.
Tech companies which are vital are being tormented by the ongoing trade war, for instance, and may lose future employees to ever-tightening visa restrictions. Whereas massive tech firms like Facebook and Google may be able to get by, nascent companies who understand that all digital marketing channels can help SEO, should be considered, too. If local American businesses are losing out to corporate empires, it doesn’t matter how robust the stock market is.
Investors and everyday business professionals may never know what exactly is driving decision-makers in Beijing and Washington when it comes to the ongoing trade war, but there are few reasons to believe that trade tensions will be resolved anytime soon. The U.S. trade deficit soared to a 10-year high despite political pledges from the president to lower or even outright eliminate that deficit entirely, and leaders around the world see little to no reason to capitulate to American demands in ongoing trade negotiations.
American farmers have been hit hard, and small businesses have been forced to find new suppliers on short notice, oftentimes leading to undue financial stress where before there was prosperity. With the trade deficit having swelled by at least$119 billion in the two years immediately following the 2016 presidential election, it’s safe to say that American businesses can’t rely on a strong economy forever.
This doesn’t mean that small businesses are doomed, of course, but rather that their ongoing struggles are largely being ignored. While some analysts continue to argue that lower federal interest rates will bolster prospects across the board, a climbing stock market does little to alleviate the fears of small business owners who are more concerned about the money in consumer’s pockets and solid supply lines in Asia than they are about Wall Street. Similarly, the relatively high amount of jobs added in certain sectors could convince authorities not to adjust rates at all, regardless of how poorly small companies performed.
Perhaps it’s only natural for payroll growth to slow this year, especially since President Trump’s ambitious Tax Cuts and Jobs Act is no longer buoying businesses across the country by enabling them to save on their taxes in order to spend more elsewhere. Businesses can’t be dependent on continued tax cuts for sustained growth.