For months now, economists and other business experts have raised concerns that the U.S. could be heading into another recession. World markets have seesawed since last summer on news that growth in China's economy is slowing. The global commodities rout has sparked significant concerns that we could head into a deflationary spiral. And closer to home, wages are growing at a tepid 2 percent, which will tamp down consumer demand and probably keep the economy growing at a comparable rate for some time.
But using small business as a yardstick--an important one, since entrepreneurs are responsible for the bulk of jobs and hiring in the U.S.--things appear to be just fine.
For the past three years, small businesses have increased their employee head counts at a average annual rate of 2.2 percent, according to the most recent data from payroll processor ADP, The Wall Street Journal reports. That compares with an average rate of 1.9 percent at the biggest U.S. companies.
What's more, through the second quarter of 2015, the most recent period for which the Bureau of Labor Statistics has data, firms with fewer than 50 employees added workers at an average rate of 0.95 percent, compared with 0.5 percent for companies with 1,000 or more employees.
Just as critically, small business owners are more optimistic than they've been in years, according to the latest quarterly Wells Fargo small business index, conducted by Gallup, which polled 600 small business owners in January. For the first quarter of 2016, small business optimism climbed 13 points from the prior quarter on Wells Fargo's scale, to 67. Nearly one-fifth of businesses in the survey said they planned increase headcount in the next 12 months, also an increase from Q4 2015.
While no one disputes that all businesses face formidable growth challenges for the rest of 2016, small businesses in the U.S. may be insulated for some time from the growing number of negative developments in the U.S. and abroad.
"The further you get from the global economy, the better the economy looks," Mark Vitner, a senior economist at Wells, told WSJ.