In an article on Friday, September 6th that appeared on both Marketwatch and the Wall Street Journal’s streaming market coverage, author Shawn Langlois quoted our article from last week, Localizing Investments. While several topics were covered in that piece, one seems to have captured Mr. Langlois’s attention – enough so that it seems worth a follow-up.
Among other issues discussed in Localizing Investments, we broke down recent mutual fund flows and noticed that money flowing out of bond funds has been much greater than money flowing into equity funds.
From that observation, and supported by other economic data mentioned elsewhere in our article, we believe that money is beginning to flow into smaller, more local investments. This includes people starting their own businesses, helping to fund smaller private ventures, and new phenomena like crowdfunding.
In the article, we noted that such an increase in local investment would ultimately prove extremely positive for the US economy, which is heavily reliant on small business. However, due to limited space, we were not able to detail just how reliant the US economy is on private enterprise.
Taking just a moment to survey statistics, it’s easy to see just how big an impact small business has on the US economy, and why an upswing in small business investments could be a significant advantage.
Obviously the numbers are vary somewhat depending on source, but according to some sources small businesses account for more than 99% of all employers, employing more than 50% of all Americans working in this country’s private sector. Additionally, small business accounts for nearly a third of the value of all exports from this country, and produce nearly half of all non-farm GDP.
Given these numbers, it’s plain to see how important small business investment is the strength of the US economy. We can only hope that the emerging trend of money flows away from market investments is leading dollars to this sector of our economy, as the long-term benefits will likely yield years of economic prosperity in a time Americans desperately need it.