CHART OF THE DAY: Small Business Employment

• ADP small business payroll growth is negative (-123K in April, -92K again in the morning’s May data) and the NFIB logged its worst Forward Outlook print ever in April
• Small business capacity to absorb margin pressure (both commodity input cost and surging labor costs) is minimal on an absolute basis and terrible on a relative basis (relative to large corporations).
• The dystopian irony for households is that even as wage inflation is soaring, real income growth is still negative and purchasing power – inclusive of the wage increases – remains negative and falling. Simultaneous record wage growth and record purchasing power loss!

Purchasing power is hostage to the rate of change and cyclical pressures evolves into secular overhangs. This is obvious but somehow still broadly underappreciated.