Sobering Presentation Reveals The Two Economies In America

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The U.S. economy and the stock market are not the same thing.

The stock market is currently sitting near all-time highs.  Meanwhile, the U.S. economy remains anemic with the unemployment rate painfully high.

Generally speaking, the stock market represents large corporations who can borrow cheaply from the bond markets and take advantage of low overseas tax rates.

Yet small business can do neither of those things.  They are also America’s most important job creators.

The lead economists of the National Federation of Independent Business (NFIB), which produces the widely followed small business optimism report, recently gave a presentation at the Richmond Fed’s Credit Market Symposium titled “One Country, Two Economies.”

In it, they lay out the state of small business, which is much weaker than what is being seen in the stock market.

The stock market belies what's really going on in the economy.

Small business optimism is nowhere near highs.

The outlook is very negative.

Much of the pessimism comes thanks to the government.

Sales remain weak.

And profits are even worse.

Few small businesses are investing for the future.

And they're inventory rooms aren't stocked for growth.

The demand for workers has been rising.

Meanwhile, businesses don't have the ability to raise prices for goods.

So, why is small business lagging?

Inflation and credit aren't the biggest problems.

Demand, however, is a pretty big problem.

But the biggest problems are all tied to the government.

Borrowing is down.

And the lack of loan demand doesn't bode well for the economy.

Here's another look at how loan demand is lagging.

The dollar value of commercial and industrial loans is trending lower.

Banks aren't exactly excited to lend.

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Another sobering look at America...

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