Economy
As Downturn Spreads, Business Failures Could Be Key To Depth Of Trouble
Published:
Last Updated:
Cutting jobs is one thing. Going out of business is another. As it becomes clear that millions of jobs will be lost by companies which are weak but will probably make it through the recession, the concern is shifting to companies which will not make it at all.
Since, by many estimates, businesses with under 100 employees represent more than 50% of the jobs in the US, watching a huge number of them burn out has become cause for increasing alarm, an alarm which does not appear to be addressed by any government bailout program.
According to the FT, The US will see 62,000 companies go bust next year, compared with 42,000 this year and 28,000 last year, says a report by Euler Hermes, part of German insurer Allianz. If the median number of people at those companies is 50, another three million people could be out of work.
As long as the government focuses it efforts on saving huge companies like GM (GM), Ford (F), Citigroup (C), and AIG (AIG), a segment of the employment market which may even be more important will remain unaddressed. Saving twenty big companies might salvage one or two million jobs. But, if more modest enterprises go under in great numbers, what has been saved will be more than offset by what is lost.
Helping tens of thousands of small operations is particularly difficult which makes it not unlike trying to improve the troubles of millions of mortgage holders. The government has tried to fix the housing crisis from the top down. Giving large banks a lot of capital should stimulate lending. It doesn’t. The financial firms simply squirrel the money away for a rainy day.
Without an effective assistance program for small companies, helping big ones is only half a measure.
Douglas A. McIntyre
The average American spends $17,274 on debit cards a year, and it’s a HUGE mistake. First, debit cards don’t have the same fraud protections as credit cards. Once your money is gone, it’s gone. But more importantly you can actually get something back from this spending every time you swipe.
Issuers are handing out wild bonuses right now. With some you can earn up to 5% back on every purchase. That’s like getting a 5% discount on everything you buy!
Our top pick is kind of hard to imagine. Not only does it pay up to 5% back, it also includes a $200 cash back reward in the first six months, a 0% intro APR, and…. $0 annual fee. It’s quite literally free money for any one that uses a card regularly. Click here to learn more!
Flywheel Publishing has partnered with CardRatings to provide coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.