US small business is disma despite GDP growth under Trump administration

Rising bankruptcies and weak job growth signal mounting pressure on small firms

Donald Trump's State of the Union is unlike any of the President's preceding him because America isn't working the way it used to. 

Small businesses, which have fewer than 500 employees and account for almost half of private sector payrolls, are suffering record bankruptcies and “still waiting for noticeable economic growth” as US gross domestic product continues to climb, the Republican-leaning National Federation of Independent Business reported last month. 

The agricultural economy is sliding, with barely half of all farms forecasted to be profitable after Trump's “Liberation Day” tariffs and war on immigrants, who account for almost 75 per cent of all crop labor. (After the Supreme Court ruled on Friday that Trump illegally imposed tariffs on US trading partners under the guise that America’s trade deficit amounts to a national emergency, he announced a global 15 per cent baseline tariff under Section 122 of the 1974 Trade Act, which allows the president to impose such duties for 150 days without congressional approval.) 

 

Optimism about the economy is no different than in early 2020, when the global pandemic was raging and everyone was worried about a depression, according to the latest survey of the nation’s chief financial officers by Duke University and the Federal Reserve Bank of Richmond. 

All this helps prove that never in modern times has the US economy grown yet created so few jobs following several interest-rate reductions by the Federal Reserve, slower inflation and a buoyant stock market (albeit one that has lagged well behind the rest of the world), according to data compiled by Bloomberg. 

The chaos caused by the tariffs, whose costs are borne by domestic companies and consumers – research the Federal Reserve Bank of New York and others show -- pressured businesses with fewer than 50 employees to cut 120,000 jobs in November alone, the largest for any month since May 2020, according to the ADP National Employment Report. S&P Global Market Intelligence found at least 717 companies that filed for bankruptcy in 2025 through November, the most since 2010, the Washington Post reported. 

“We’re heading into our most critical season not with optimism but with fear,” Gabe Hagen, the owner of Brick Road Community Corp., a coffee roaster in Tempe, Arizona, facing rising import costs and, more recently, cautious consumers, was quoted as saying in a December Bloomberg News report. “Fear that our customers can’t afford to spend, fear that policy failures are crushing our ability to compete and fear that we won’t survive another year of this economic squeeze.” 

The normalcy of GDP expanding 2.2 per cent during the first 12 months of Trump's second term, the S&P 500 Index gaining 16 per cent, the rate of inflation as measured by the Consumer Price Index slowing to an average 2.7 per cent for the year and the Fed cutting rates three times is belied by the lowest job creation in at least half a century -- only 359,000 additions. During the past half century, there have been only 12 years when the US lost jobs or added fewer than 400,000, which makes 2025 the only year that enjoyed a seemingly healthy economy with such anemic employment growth, according to data compiled by Bloomberg. 

“You see small manufacturers, family businesses, the farming community -- they're just scraping by,” Gene Seroka, executive director of  the Port of Los Angeles, the largest gateway for international trade in America, said during an interview at Bloomberg headquarters in New York earlier this month.  “Importers are dipping into cash to try to pay elevated product costs because of the tariffs and folks are making tough decisions.” 

The economy Trump inherited was dubbed “The Envy of the World” by The Economist magazine in October 2024, just before Trump was voted back into office. Back then, the economy added 1,236,000 jobs during President Joe Biden’s last year in office, or 3.4 times Trump’s 2025 total. Even with nine million jobs lost during Covid-19 in 2020 and eight million jobs vaporized during the 2008-2009 global financial crisis, the yearly average change in non-farm payrolls is 4.5 times Trump's 12-month result in his second term, according to data compiled by Bloomberg. 

Some 21 per cent of consumers say jobs are hard to find, the highest percentage since February 2021, according to the Conference Board whose data is compiled by Bloomberg. The percentage of consumers saying jobs are plentiful fell to 24 per cent, also the lowest since February 2021. 

Blacks have been hit especially hard by Trump’s policies. In April 2023, the jobless rate for this group of Americans dropped to a record 4.8 per cent, narrowing the gap with the national average to an all-time low of 1.4 percentage points under Biden since such data was compiled in 1972, according to data compiled by Bloomberg. The gulf widened under Trump by almost three times to 3.7 percentage points in November, the widest since 2020 when Trump was wrapping up the final year of his first term.  

When the US economy was “the envy of the world'' in 2024, the dollar was strong as measured by the Bloomberg Dollar Spot Index, which tracks the greenback’s performance against a basket of the 10 most-traded currencies. Last year, though, the dollar depreciated 8.1 per cent, the most since 2017 and when Trump first occupied the White House. 

No wonder consumer confidence in January fell to its lowest since May 2014, according to the Conference Board, capping a 20 per cent plunge over the previous 12 months.