For U.S. companies, the recovery is all about size


Extrait de: For U.S. companies, the recovery is all about size, Kevin Carmichael, Globe and Mail, March 8, 2011

There’s been a lot said about the two-speed recovery of the global economy. Less remarked upon is the two-speed nature of the U.S. rebound.

Corporate profits are soaring – so much so that big companies have about $2-trillion (U.S.) sitting on the sidelines. For smaller companies, which represent about half of U.S. gross domestic product, the recovery from the Great Recession is only just beginning.

The National Federation of Independent Business’s optimism index climbed to 94.5 in February, the highest since the recession began in December, 2007. That’s positive. But the figure still is well below its historical norm. The index averaged 100.7 over the previous expansion, which began in November, 2001, according to calculations by Bloomberg News.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, demonstrates the two-speed nature of the U.S. recovery by graphing the Institute of Supply Management’s manufacturing index against the NFIB’s business activity index. The two readings began to diverge in the summer of 2007, when stress in financial markets first began. The two surveys touched again briefly after the bankruptcy of Lehman Bros. Holdings Inc., when every business in the country was pulled into the abyss. The ISM index began climbing again in the first half of 2009, while the NFIB index continued to decline.

High frequancy Economic

The reason for the divergence: credit. The immediate effect of the Fed’s fight against the financial crisis was to stabilize the commercial paper market, used by bigger companies to raise funds.

Évidemment, tous ceux qui gravitent autour de la finance,
 tel que les Goldman Sachs
et cie, ils ont eu droit au repas 5 services
avec l’argent du peuple.

Pour les PME, vous avez droit au restant.

Smaller companies depend on banks, and the countries financial institutions have been slow to restore credit to small and medium-sized companies.

The banks were saved, but their small business customers were left to fend for themselves,” Mr. Shepherdson wrote in a research note Tuesday. “As a result, they did not participate in the initial rebound in economic activity from the post-Lehman crash.”

Small companies matter because they are big generators of jobs. According to Mr. Shepherdson, they create more employment per unit of incremental GDP than larger companies, “so the failure of employment growth to live up to expectations as the economy started to recover is largely a reflection of the lopsided nature of the recovery to date.”

Credit for smaller companies appears to have stabilized, but is improving only gradually, if at all. The NFIB survey shows that participants’ views of “expected credit conditions” were unchanged from January. Thirty-one per cent of companies reported borrowing “at least once every three months,” compared with 34 per cent in February, 2010, and 39 per cent in February, 2007. Fifty-one per cent of companies in the survey said they didn’t want a loan, as a “historically high” number continued to say that sales are weak.