24/7 Wall St.

The government and most economists say that the recession is over. It ended late last year, in fact. Several recent polls of consumers show that the average American believes that the recession is still going on. He cannot get credit to buy a new car or TV. His brother and his neighbor are out of work. Someone he knows has reached the limit of 99 weeks of unemployment benefits. That “someone” does not have a place to live anymore.

Small businesses look at the world, apparently, like the average US citizen does. Credit is remarkably tight. Hiring is close to zero.

A new Gallup poll shows that “The Wells Fargo/Gallup Small Business Index — which measures small-business owners’ perceptions of six measures of their current operating environment and future expectations — fell 17 points to -28 in July. This is its lowest level since the index’s inception in August 2003.”

That means that small businesses see almost no hope for a recovery this year. Small businesses are still considered a prime growth engine of the economy. The SBA claims that small businesses have generated 60 to 80 percent of net new jobs annually over the last decade. There is no economic recovery without these enterprises staying healthy.The Gallup figures are even worse when they are looked at in detail:

Most of the decline in the overall index came in the Future Expectations Dimension of the index, which measures small-business owners’ expectations for their companies’ revenues, cash flows, capital spending, number of new jobs, and ease of obtaining credit. The dimension fell 13 points in July to -2 — the first time in the index’s history that future expectations of small-business owners have turned negative, suggesting owners have become slightly pessimistic as a group about their operating environment in the next 12 months.

And, there is little reason for the numbers to improve soon. Federal statistics continue to show banks will not lend to small businesses, and the loans that are made usually are equal to an amount that it is no higher than the money that the borrower has in the bank. That sort of loan does not seem terribly valuable.

The Administration and Congress continue to miss the point that one of the quickest ways to improve the joblessness problem is to provide direct access to small businesses so that they can stage some sort of recovery. The capital markets are willing to fund the federal deficit and bond issues from big companies. Those investments are viewed as safe. Small businesses cannot escape the stigma of being “risky.”

What is even more risky than giving small businesses loans is to not give them. Unemployment is likely to stay stuck where its is or even rise when the engine of the economy is broken.

Douglas A. McIntyre