The US added 275,000 new jobs in February, signaling continued economic growth and inspiring confidence that a soft landing can be achieved. But these numbers don't tell the whole story.
New data from Intuit shows that businesses with nine or fewer employees, which account for 13 million jobs nationwide, actually cut jobs last month, eliminating more than 23,000 jobs, a key factor in the economy. This indicates that concentrated attention is needed on these areas.
Managing a small business is a big challenge. Approximately half of new small businesses do not survive the past five years. Despite these challenges, small business owners remain dedicated to pursuing their dreams, solving problems, and serving their customers with pride and passion. But they also feel that the deck is stacked against them and that they are alone and alone.
One reason SMEs feel this way is that their needs are often invisible to policy makers. The Economic Trends Report, which includes government data such as recent employment numbers, is not designed to provide detailed and real-time data on small businesses with fewer than 10 employees, and is This is the only government data that covers delays. From 6 months to 9 months.
As a result, policymakers are working without an accurate picture of the health of small businesses in real time.
To fill this void and help policymakers, Intuit partnered with a team of economists led by University of Chicago economist Ufuk Aksigit to launch the Intuit QuickBooks Small Business Index. The index extracts data from over 330,000 of his Intuit QuickBooks customers and is normalized against official government data to provide unique and up-to-date insights that reflect the general population of small and medium-sized businesses. .
Our hope is that this new, rigorous data will enable policymakers to make decisions that better serve the unique needs of small businesses.
While the overall economy is strong, our index shows that conditions in the small business economy are not so strong and continue to face strong pressure from inflation and high interest rates. The index shows that employment growth at small and medium-sized enterprises is slowing and financial pressures are increasing.
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And while rising interest rates have helped ease inflation, they have also caused significant damage. In his two years from the beginning of 2022, when interest rates started rising, our index shows a total of 15 months of negative employment growth, compared to just 9 months of small business growth. .
Increased use of corporate credit cards
Additionally, small business owners are increasingly relying on credit cards to finance their businesses, and rising interest rates are increasing their payments. Many people have tapped into their savings to pay off credit card debt, with 76% saying they have used more than 30% of their credit limit.
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Taken together, these pressures are trapping small and medium-sized businesses in a cycle in which they find it more difficult to compete with larger, more established companies, making it even more difficult to grow and create jobs.
This should be a concern to lawmakers in Washington, as small businesses play a critical role in driving jobs and innovation across the country. Without focused attention, a continued decline in business dynamism can have serious long-term consequences.
AI can help small businesses grow
As policymakers work to maintain and increase the nation's economic momentum, here are some key actions to give small businesses a boost, based on data from the Intuit QuickBooks Small Business Index Annual Report .
- Provide access to digital tools. For financially and digitally connected businesses to grow faster, Congress must pass the common-sense, bipartisan Small Business Technology Advancement Act.
- Enabling AI for small businesses. President Joe Biden should work to establish a Small Business AI Innovation and Commercialization Institute, as proposed in the White House Executive Order on Artificial Intelligence. Congress needs to seize this once-in-a-generation opportunity to ensure new regulations allow small businesses to take full advantage of the benefits that AI tools have to offer.
- Facilitate access to credit. Our data shows that access to credit remains one of the biggest pain points for emerging SMEs. As Congress debates new capital standards for banks, we urge policymakers to maintain partnerships between banks and financial technology (fintech) to ensure small businesses have ready access to credit. Encourage.
Even in an increasingly polarized environment, more than 90% of Americans have a favorable view of small business owners.
Help small businesses thrive by making better-informed decisions based on real-time challenges. The Washington government should follow the right data and enact policies that make it easier for small businesses to grow and create jobs.
Sasan Goodarzi is the CEO of Intuit, a global financial technology platform that provides software such as QuickBooks, Mailchimp, TurboTax, and Credit Karma to small and medium-sized businesses.
