Academic journal article ABA Banking Journal

Want Jobs? Focus on Optimism

Academic journal article ABA Banking Journal

Want Jobs? Focus on Optimism

Article excerpt

"I DON'T BELIEVE you can love jobs and hate business at the exact same time. It does not work." These words, from Atlanta Mayor Kasim Reed, have stuck with me ever since he made the comments in his State of the City address more than three years ago. I thought about it again recently as I continue to hear from bankers that "things are better but something is still missing."

To me, it's a lack of confidence by businesses. It's no surprise that the Great Recession set businesses back. In the first quarter of 2009, there were 64,000 more business "deaths" than there were business "births." From the end of 2007 until 2011, business deaths exceeded births by more than 350,000--a 4.5 percent decline in all business establishments. In the three years since, we have only created about 200,000 new firms. Something is still missing.

In the two decades prior to the financial crisis, business confidence went up and down reflecting the economic cycle but didn't vary too much from the long-term average (see the nearby chart from the National Federation of Independent Businesses. Recessions--such as in the early 1990s and 2000s--knocked confidence back, but it quickly regained momentum. Contrast these 20 years prior to the Great Recession with the last eight. Business confidence has been in the dumps for years now and has only recently climbed its way back toward historical averages.

The lack of confidence translates into hesitancy to take risks and expand the business. …

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