Aplus.net Blog

Optimism is important in running a successful business. Why? Because, to get past the inevitable rocky patches, you need to have total faith in what you’re doing. Your belief in your company has to be stronger than the occasional downturns on the path to success.

Alas, news about the American economy in the past several months can challenge even the sunniest outlook of the most die-hard optimist. This week, in addition to record-high gas prices, we’ve learned that the American employment rate continued to fall in February, the second month in a row. 63,000 jobs were lost last month, according to the U.S. Labor Department (as quoted by the New York Times). This news is “far worse than most analysts had expected,” according to the New York Times article by Edmund L. Andrews.

More from that article:

Even before the bad news on jobs emerged, the Federal Reserve was already racing to ease the latest crisis in the credit markets, where seemingly rock-solid companies have been caught short because the markets are devaluing the collateral they had posted to back billions of dollars in loans. Much of that collateral consists of mortgages.

In a surprise announcement early Friday, the Federal Reserve said it would inject about $200 billion into the nation’s banking system this month — with more to come after that — by offering banks one-month loans at low rates and in return letting them pledge mortgage-backed bonds and even riskier assets as collateral.

Though monthly payroll data are notoriously volatile and subject to revision, the jobs report was so bleak that many of the few remaining optimists on Wall Street threw in the towel and conceded that the United States was already in a recession.

So how does this all affect small businesses? That’s a good question, considering that these kinds of reports generally focus on the top-earning corporations. According to the article, though, any kind of credit anxiety does reverberate through the entire economy.

Fed officials said Friday that they were pumping money into the system not in response to the poor jobs data but rather to the growing unwillingness or inability of investors to finance even routine business deals. Fed officials have long feared that anxiety about credit losses would create a “negative feedback loop,” or self-perpetuating spiral of rising unemployment, more home foreclosures and yet more credit losses.

Credit liquidity is important to everyone in the business community, no matter what size their company. If credit dries up, loans will be harder to get, and that can be a major roadblock to all business growth — including each of ours.

As of yet, the government is avoiding any mention of the word “recession,” but a lot of commentators can’t help but suspect that’s the path we’re all on. If so, the next few years could indeed be gloomy ones, even for the most optimistic among us.