Last week, we noted, per the Institute for Supply Management (ISM), that American manufacturing shrunk in June for the first time in three years. This struck us as quite significant. However, according to the Wall Street Journal’s Real Time Economics blog, some economists warned against reading too much into the report. They noted that manufacturers aren’t a huge part of the U.S. economy compared with the service-related businesses that cater to ordinary Americans.
But now, the ISM has followed up with a report on the service sector showing that activity there fell in June to its lowest level in more than two years. Moreover, Real Time Economics tells us that confidence among small-business owners is tanking.
The National Federation of Independent Business’s Small Business Optimism Index fell to 91.4 in June, down 3 points from May. Economists had predicted a milder fall to 93. And a sub-index that tracks expectations about economic and business conditions over the next six months sank eight percentage points to minus 10%, after rising three points to minus 2% in May. Another sub-index that tracks plans to hire dropped three percentage points to 3% in June after rising one percentage point in May.
The manufacturing sector, the service sector, the small business sector — it seems that this economy has no place to hide. And neither does the president who presides over it.