Main Street, not Wall Street, is the leading economic indicator

Jim Blasingame

What sector of the U.S. marketplace produces over half of the economy, signs the front of over half of U.S. private payroll checks, and is the perennial new job engine? 

No, it’s not Corporate America or Wall Street banks. It’s Small Business America. If this sector were a sovereign country it would be the largest economy in the world.

So why does Wall Street, instead of Main Street, get all of the economic media coverage?

William Dunkelberg, Ph.D., NFIB’s Chief Economist, is the oracle of the Main Street economy. For more than 40 years his monthly Small Business Optimism Index has been the gold standard for this sector. Alas, since 2007 his Index has recorded an unprecedented cycle of sustained levels below the 40-year optimism average. Find the Index at and  Plus Bill reports his findings on my radio program every month.

On the other end of the precious metals scale of small business polling, closer to the copper standard, is me. For several years my online poll has asked small business owners weekly about their take on the economy. Recently we asked which of five business issues is the most pressing:  cash flow, a business loan, more customers, Obamacare, taxes and/or regulations. Here’s what we learned:

One marker of sustained business success since 2008 is deleveraging, which manifests, in part, as improved cash flow. Consequently, when cash flow concern registers only a 16% response, and loan demand gets no takers, these are the two sides of the deleveraging coin. But low loan demand also means low growth expectation.

Obamacare barely moved the worry meter at 5% in our poll because this issue will be dormant until Q4 2014, when we learn what the 2015 employer mandate will cost.

The big concerns, more customers at 54% and taxes/regulations at 25%, can be taken two ways: No one admits to having enough business and no one likes taxes and regs. But based on the economic indicators of the first half of 2014, plus recent tax increases and out-of-control growth of regulations that disproportionately hurt small businesses, these are not gratuitous responses; they’re the true top concerns of small businesses. And they track with the NFIB Index.

As I’ve been saying since 2006, Wall Street is no longer a leading indicator of the economy; it’s now merely a leading indicator of itself. If you want to know the true condition of the U.S. economy, listen to Main Street small business owners. 

Write this on a rock …

The small business sector is now the true leading economic indicator of the U.S.

Jim Blasingame is the author of the award-winning book, “The Age of the Customer: Prepare for the Moment of Relevance.”

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