Small firm profits plummet to financial crisis lows as the Fed admits economic weakness.

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The alarm bells are ringing as profits for U.S. small firms have plunged to their lowest levels since the financial crisis. In August, a staggering 37% of small businesses reported falling earnings, marking the worst reading since January 2010 and one of the bleakest in over half a century. This isn’t just a blip on the radar; it’s a sign that the economic foundation is cracking, and we should brace ourselves for a deteriorating job market.

Adding to the unsettling news, the Federal Reserve has finally acknowledged the weakness in the economy, admitting they are behind the curve. In an unexpected move, they cut interest rates by 0.50%, the first reduction since the March 2020 COVID crash. This cut comes with expectations for two more 0.25% cuts in 2024, a major surprise echoing the darkest days of the 2009 financial crisis.

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The Index of Leading Economic Indicators is likely to continue predicting a recession, sending shivers down the spine of both businesses and consumers alike.

Sources:

https://www.nfib.com/surveys/small-business-economic-trends/

https://www.marketplace.org/2023/11/28/corporate-profits-have-been-trending-down-thats-what-the-federal-reserve-wants-to-see/

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