Jim Clifton | September 21, 2016 | EFT Daily News
Jim Clifton, CEO of Gallup, one of the largest polling organizations in the world, just penned a piece that pans the supposed U.S. economic recovery — and he has the demographic data to support it.
“I don’t think it’s true,” writes Clifton, in response to recent reports in the New York Times andFinancial Times about a recovering economy. He notes that the amount of Americans who consider themselves above “lower class” has plunged in recent years:
The percentage of Americans who say they are in the middle or upper-middle class has fallen 10 percentage points, from a 61% average between 2000 and 2008 to 51% today.
Ten percent of 250 million adults in the U.S. is 25 million people whose economic lives have crashed.
Clifton identifies three main data points that he’d like to see serious improvement in for him to believe in an actual recovery, specifically, anemic full-time employment, a dearth of publicly-traded companies, and a lack of new business startups:
There are three serious metrics that need to be turned around or we’ll lose the whole middle class.
- According to the U.S. Bureau of Labor Statistics, the percentage of the total U.S. adult population that has a full-time job has been hovering around 48% since 2010 — this is the lowest full-time employment level since 1983.
- The number of publicly listed companies trading on U.S. exchanges has been cut almost in half in the past 20 years — from about 7,300 to 3,700. Because firms can’t grow organically — that is, build more business from new and existing customers — they give up and pay high prices to acquire their competitors, thus drastically shrinking the number of U.S. public companies. This seriously contributes to the massive loss of U.S. middle-class jobs.
- New business startups are at historical lows. Americans have stopped starting businesses. And the businesses that do start are growing at historically slow rates.
For thing to truly improve for the majority of all Americans, says Clifton, we’ll need to see a renewed boom in small business creation:
Gallup finds that small businesses — startups plus “shootups,” those that grow big — are the engine of new economic energy. According to the U.S. Small Business Administration, 65% of all new jobs are created by small businesses, not large ones.
In an era where the big just keep getting bigger, and the small seem to simply fade away, it’s easy to see why how the wider economy — and everyday Americans — will suffer. Despite relatively low unemployment and stocks trading near all-time highs, real economic growth has been very slow to respond, and that won’t change until we see a renaissance in smaller firms.
Bottom line: The two most trusted institutions in the U.S. are the military and small business. Most people know about our military’s importance, but not as many appreciate the role small business plays in creating the majority of new jobs and in national security itself.
Most people’s preferred measure of the economy, The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) was unchanged in premarket trading today ahead of the upcoming Federal Reserve decision. The DIA, which is the largest ETF that tracks the DJIA, has risen 4.06% year-to-date.