It’s All About Demand!

It isn’t as if this is Brain Surgery! But then seeing the approaching Meltdown wasn’t Brain Surgery either.

So, many of the small businesses that for years I have been dealing with have now closed. Broadway in my neighborhood has more plywood in the windows than Home Depot has on the shelves. And yet as empty retail space proliferates and Commercial Real Estate falters NYC landlords continue to demand rent increases at a time when consumer spending falters as well. Meanwhile our representatives in Washington and pundits elsewhere are talking about how we need tax cuts so that small businesses can hire employees. And they should be hiring employees to do what?

This is all well and good except that we are an economy that depends for 70% of its “GDP” on consumer spending and a service economy. And this is during a recessionary period of 10% formal unemployment and approximately total unemployment and underemployment of around 20%. Folks are looking at a future with long term unemployment and as a result are pulling back on spending for anything other than absolute necessities.

Everyone I have spoken to has talked about demand and that their businesses have dropped off dramatically. People are not spending money on any extras, not on eating out, buying any extras and they are trying to make every dollar stretch by looking for deals on necessities. And this includes the small business owners as well.

Now the Mom and Pop stores have been under attack by the Big Box Stores for some time now, which is why I shop small and local. And I would also urge you to as well.

Tax cuts to businesses that have fewer customers will do nothing to incease employment in small business, what will help is customer demand and that is what we need and that folks is stimulus and the only place we can get this now is from the gummit. It may well increase demand which is what we need. When people start spending, as that is what stimulus is about, putting money into the hands of actual folks, there maybe some turn around in our errant consumer economy. Now it isn’t just me saying this. There is also Atrios and CR. And they are very serious folks.

Now I will admit that I have been part of the Church of Stop Shopping for years, mostly because I believe our economy should be based on producing actual stuff that is necessary and not just buying Chinese “salad spinners” as Kunstler would say. But if you must, buy small and local.

It is the least we can do. The American way is changing and even though our “Leaders” aren’t talking about it “The Times They Are a Changing.” And the old fixes will no longer work. Cutting taxes on “Business” is one of the solutions that got us into this fix. Back in the day I ran a small business and under the tax code I was able to write off everything and a tax cut would have done nothing to increase demand for our services.

I am not saying, I am just saying!

And here is Dr. Doom’s two cents: