By Nick Davis
The stock market hit yet another all time high Tuesday afternoon as the Dow Jones Industrial Average (DJIA) just barely moved into the green as the final bell hit. Meanwhile, we found out Monday that the economy added a surprising 236,000 jobs in February to take the national unemployment to a four year low of 7.7%. So, what are we to make of these bits of good news? It might seem that we are on the road to economic recovery, but Corporate America might as well be another planet compared to the millions of Americans that work on Main Street.
I don’t think anyone can argue that we aren’t in a better position than when Obama took office. But, let’s keep some perspective. By no means are we even remotely close to returning to pre-recession economic levels. While investors and Corporate America are riding the Wall Street gravy train, the poor and middle class are still struggling to make ends meet.
Some economists, most notably Lakshman Achuthan of the Economic Cycle Research Institute, are saying that we’ve actually been in a recession since the middle of last year. He cites an 18-month low in year over year payroll jobs growth as well as a 16-month low in year over year household jobs growth. Year over year job growth is simply a comparison between this time last year and today. In the first two months of last year, the economy created 582,000 jobs compared to 385,000 this year. Additionally, the fourth quarter of 2012 produced a measly .1% in GDP growth, hardly an economic boom.
In 2007, just before the stock market crashed, we saw the Dow reach its previous all time high. Anyone see a resemblance here? I’m not trying to say that we’ll see another great recession, but this can’t be a good sign. It simply means that the DJIA is not a useful tool to measure economic growth.
Sometimes I think the wealthy get a bad rap when they shouldn’t. Yes, there is a significant income gap between them and everyone else. No one doubts that. It’s easy to demonize the rich when Obama talks about raising taxes on upper-income Americans. We all know they’ll survive no matter how much they pay in taxes. With that in mind, I think its time we start focusing our efforts on how we can help small businesses grow. We need to bring everyone else up, instead of bringing the 1% down. The Tax Foundation recently found that the top 10% of Americans actually pay more than their fair share of federal income taxes, a whopping 70.6%, up from 55% from 1986.
Whether or not you believe in trickle down economics, corporations are only a single part of our economy. In fact, 98% of businesses in the United States can be considered a small business. These companies don’t have big legal departments to research how Obamacare or Dodd-Frank will affect them. President Obama and Congress could do a lot of good for the American people if they could just find some common ground. The political uncertainty that comes around every couple of months with a fiscal cliff, sequestration, or a budget ceiling debate leaves employers skeptical and cautious about hiring additional help. It’s easier to get by as is rather than hire someone and eventually lay him or her off.
America needs to renew its focus on small businesses. Some of the best innovations and personalities come out of startups, just take a look at Silicon Valley. We need legislation and incentives that target Main Street, not Wall Street.