by Alfredo Ortiz
The specter of stagflation has returned. The monthly jobs report released Friday showed only 175,000 jobs were created last month, well below the recent average and expectations.
More than half of new jobs were created in the unproductive government and quasi-government healthcare and social services sectors that don’t generate growth. Average wages grew at a slower rate than inflation, meaning Americans’ real wages and living standards are declining.
The jobs report comes on the heels of economic data last week showing that GDP only grew by 1.6% in the first quarter of this year, well below expectations. Meanwhile, inflation is resurgent, growing at about twice the Federal Reserve’s target rate.
As a result, the Fed announced this week that it is keeping interest rates steady at a 22-year high, exacerbating the credit crunch facing small businesses.
American small businesses are the biggest victims of this stagflationary economy. This is the main story of National Small Business Week this week.
President Biden is claiming a small business “boom” under his administration. The reality is entrepreneurs grapple with a triple threat of a decelerating economy, soaring inflation and escalating credit expenses due to his bad policies.
American consumers have a record $1.2 trillion in credit card debt. They can’t afford to keep up their discretionary spending, which small businesses rely on to survive and thrive.
It now costs the average American family $12,000 more to enjoy the same living standards as before President Biden took office. Since Biden’s inauguration, wholesale costs for small businesses have risen by 20%.
Businesses large and small are warning that consumers are priced out. “Consumers continue to be even more discriminating with every dollar that they spend as they faced elevated prices in their day-to-day spending,” said McDonald’s CEO Chris Kempczinski on an earnings call this week. Consumers are trading down from eating out to eating at home, hurting independent restaurants, bars and main streets.
Given these headwinds, it’s no surprise that Job Creators Network’s national poll of small businesses finds two-thirds of respondents say the current economic climate may force them to close their doors. Most businesses say the price hikes they are facing are more than the official inflation numbers suggest. One-third say elevated neighborhood crime is reducing their earnings.
Small businesses are whimpering, not booming.
And they are being weighed down by Democrats’ bad policies. Consider the reckless spending fueling inflation’s fire. The annual deficit is on track to surpass $2 trillion
The Biden administration is also in the midst of a regulatory onslaught that’s hitting small businesses hard. It recently issued rules expanding overtime pay, banning noncompete contracts, mandating electric vehicle use and regulating internet access. According to the American Action Forum, the Biden administration has issued more than $1 trillion of regulations–30 times more than under President Trump.
Biden’s biggest threat to small businesses is still to come. He recently promised that if he’s reelected, he will dramatically raise taxes on small businesses by letting the Tax Cuts and Jobs Act expire in 2025 as scheduled. That means small businesses would face a 20% tax hike, the end of bonus depreciation and higher tax brackets on their earnings. This massive tax hike would throw today’s stagflationary economy into recession.
Here’s the real message of National Small Business Week: Biden and Democrats are waging a war on small businesses that’s throwing the economy into stagflation and that won’t end until they’ve been voted out of office.
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Alfredo Ortiz is CEO of Job Creators Network, author of “The Real Race Revolutionaries,” and co-host of the Main Street Matters podcast.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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