Small business profits still flat

The classic reason a stock price rises is the positive performance of the issuing company, especially profitability growth.

To look at the record levels of stock indexes you’d think the profitability of companies traded on Wall Street was also setting records. It isn’t.

Here’s an alternative reason stock prices are up: The Fed’s accommodative policies have made equities more attractive than other types of investments.

But while Wall Street parties, Main Street is in danger of having a Japanlike lost decade.

Recently there have been reports of rising profits among America’s small businesses. We wanted to know if our audience would support that news, so in our online poll we asked: “Some surveys indicate that small business profits are up. What is your experience?” Here’s what we learned:

Less than one-third of our respondents said they see an improved profit trend. The rest, 69 percent, allowed that they are not seeing a trend toward profitability. It’s likely that any spike in small business profits is more a product of operating efficiencies rather than growth.

Here are the issues that are waking small business owners up at 3 a.m.: Annual GDP growth of 2 percent is not exactly ringing the cash registers; millions of unemployed Americans do not make very good customers; large companies are hoarding cash or buying back their stock instead of investing in growth; regulations have increased by 60 percent since 2005; looming Obamacare compliance costs will be unprecedented since 1913, when the 16th amendment created the income tax and gave the IRS something to do.

What’s wrong with this picture?

WRITE THIS ON A ROCK ...

America needs businesses to increase profits from growth, not just efficiencies. Are you listening, Washington? Jim Blasingame hosts the Small Business Advocate Show.