It's surreal-and exhausting-to ponder how much our country has been through over the past five years. The dotcom boom. The controversial 2000 presidential election. The dotcom bust. 9/11. Enron. Iraq. Janet's "wardrobe malfunction." The list goes on.
These strange times can mess with an entrepreneur's head. As we hit the midpoint of the first decade of the new millennium, chances are you're either feeling exceedingly optimistic or somewhat pessimistic about how things are going.
There are plenty of people on both sides of the fence. Economic pessimists point to disappointing job-growth figures, an increasing number of bankruptcies, shaky consumer confidence and anemic investment as indications that the times are bad and getting worse. As of September, 724,320 job cuts had been announced-higher than every year-end total prior to 2001, according to Chicago-based global outplacement firm Challenger, Gray & Christmas Inc. The Economic Cycle Research Institute, an independent forecasting group in New York City that releases a weekly report gauging growth in the overall economy, concluded economic growth fell to an 81-week low this past October as mortgage applications slowed and more people filed initial jobless claims.
"I have never been so pessimistic in making any [economic] forecast since 1981-82," says Robert H. Parks, economist and professor of finance at Pace University in New York City, and author of Unlocking the Secrets of Wall Street. Parks doesn't see evidence of a sustained economic recovery. Instead, he sees the specter of rampant asset inflation concerning housing and stocks, skyrocketing deficits, and a war with no end in sight. "The biggest single problem of the business community [in 2005] will be uncertainty," he says. "Trying to make a small business blossom over the next 18 months is going to be a very rough job."
Economic optimists, on the other hand, point to 11 straight quarters of economic growth, low inflation and interest rates that remain at historic lows as signs that the times are good and getting better. So while the job market may not be growing as quickly as expected, it is still growing.
SurePayroll-a Skokie, Illinois-based national provider of payroll services exclusively for small businesses-collects hiring and wage data from its 13,000 clients, and estimates that although the average small-business paycheck has dropped 3.3 percent year-to-date, the average head count grew from 5.5 to 5.6 employees between the second and third quarters of 2004. "Hiring has increased at small businesses across the country," says Michael Alter, president of SurePayroll, "which bodes well for saying the economy is recovering."