Job Market Challenges and Economic Concerns
This Friday’s job report, along with surprising downward revisions from recent employment figures, indicates that the Federal Reserve may have kept interest rates too high for too long. I mean, it almost seems to validate President Trump’s criticism of Jerome Powell, suggesting that he’s, well, somewhat too late in his approach.
It appears that the primary issue facing the economy isn’t inflation anymore—something that Trump and Congressional Republicans claim to have tackled. Instead, it’s the restricted access to credit that small businesses need to thrive.
With elevated Fed interest rates, job creators across the country are struggling to leverage the historic tax cuts that came into play last month. It’s like they’re operating with one arm tied behind their backs, so to speak.
Many small businesses are eager to take advantage of these tax cuts, planning to expand and hire more employees. Unfortunately, high interest rates are hindering those ambitions. I mean, it’s all pretty discouraging.
Take Gerald Williams, for example. He runs a California Hot Sauce business and was looking for a $50,000 loan to expand and purchase a commercial kitchen. “I got turned down by several small to medium banks,” he said, adding that the lending process was so frustrating he eventually just gave up.
In Virginia, Chantel Chambliss was on the verge of securing a $25,000 loan for her small business, but even that journey reflects a broader struggle.
According to a report from Goldman Sachs, a staggering 79% of small business owners are finding it tough to access credit. A notable 28% indicated that the loans available come with predatory terms that, frankly, are just unfair.
It seems that rather than respond to the data, Fed Chairman Jerome Powell has become somewhat dismissive of it. There’s a call for him to recognize his missteps and lower interest rates to help stimulate the economy, especially for small and medium-sized businesses. JCN has even started a petition pushing for this change.
But, interestingly, the labor market’s strength might be hiding beneath the surface. For instance, 84,000 federal jobs have disappeared during the Trump administration, not counting those on paid leave.
Moreover, average annual revenues are reportedly climbing, exceeding expectations. This doesn’t even factor in the recent uptick in workers’ take-home pay due to increased tips and a new overtime tax credit.
But you wouldn’t know that if you only looked at mainstream media, which seems to have glossed over how these tax credits could help hardworking Americans save quite a bit—around $1,700 annually on average, though many are saving even more.
To break it down, workers earning under $150,000 can write off $25,000 as tip income, potentially saving about $6,000 a year at a 24% tax rate. Families earning under $300,000 can also amortize $25,000 in overtime income, adding up to similar savings.
These savings could significantly assist with monthly bills or groceries, making a real difference in some lives. It’s essential for these workers to remember to appreciate those who backed these tax savings—largely President Trump and the Congressional Republicans—since no Democrats supported them.
Unfortunately, the Fed seems to be conflicting with Republican efforts aimed at promoting growth. We find ourselves in a time when fiscal and monetary policies should work better to support small businesses and the broader economy.
