Economic Outlook: Think small

By ANTHONY HALL, United Press International   |   Feb. 1, 2012 at 9:25 AM
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All eyes fall on jobs data Wednesday in a news release that is a preliminary run up to Friday's government report.

Automatic Data Processing Inc. said that 170,000 private sector jobs were added to the economy in January, a sharp decline from the downwardly revised 292,000 jobs gained in December.

The report covers private sector employment and is trumped each month two days hence, on Friday, when the Labor Department's job situation report is released. That covers public and private employment.

Lately the trend points to fewer jobs gained in the Friday report, given that government spending is in decline, especially at the federal level.

A day after President Barack Obama announced a major initiative to help small businesses, ADP points out why. Since the recovery began, the trend has been crystal clear: Small businesses are hiring, while large firms are sitting on the sidelines.

In January, companies with 500 or more workers added 3,000 jobs to the economy, while medium-sized firms, those with 50 to 499 workers, added 24 times that amount, hiring an additional 72,000 in the month. Smaller firms, those with 49 or fewer workers, did even better, hiring 31 times the number of workers as large firms, adding 95,000 to their payrolls in the month.

Some will say Obama's initiative is a good example of a leader following the masses and proclaiming he got them there, but that would overlook about $900 billion spent in his 2009 stimulus package, much of which was spent preserving jobs in education and local governments. That was a one job at a time approach and it reflected that much in the records, saving jobs rather than creating them.

That initiative also and returned tax dollars to the middle class and that was spent, presumably, on goods produced by companies small and large.

Obama is now aiming a bit lower. Tuesday's announcement said that federal agencies are now on high alert for making things easier for small businesses to get started and to keep running. Agencies "are all launching complimentary initiatives to support entrepreneurship as well. And so what we want is to make sure that every single agency … (is) also thinking about how we are advancing the cause of giving small businesses and entrepreneurs opportunities to start creating the next Google or the next Apple that's going to create jobs and improve our economy."

In part what is smart about this -- one basic tenet of American commerce -- is that Obama proposes to wait to see what direction creative people take the economy and build the sidewalks later.

That's how planners work it on college campuses. First you build the building, then you wait to see where the grass gets worn down. Then you put in the sidewalks accordingly.

It still seems unlikely that the government of a country this big can promote creativity in the first place. Where does the next Google come from? And isn't the next Google going to take 100 failed attempts before a solid idea takes hold? By aiming to help start ups, the government is attempting to help companies that don't exist, let alone companies that have less than 10 on their payroll. It's a brave step. But spending unwisely in the name of creativity is sometimes the same thing as spending well.

In international markets Wednesday, the Nikkei 225 index in Japan was flat, rising 0.08 percent, while the Shanghai composite index in China fell 1.07 percent. The Hang Seng index in Hong Kong shed 0.28 percent, while the Sensex in India rose 0.62 percent.

The S&P/ASX 200 in Australia lost 0.87 percent.

In midday trading in Europe, the FTSE 100 index in Britain added 1.3 percent, while the DAX 30 in Germany rose 2.09 percent. The CAC 40 in France added 1.51 percent, while the Stoxx Europe 600 gained 1.42 percent.

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