Gridlock in Washington, Progress on Main Street

If you, like us, spent the past week in a blind rage at the arrogance, greed, and shortsightedness of Washington and Wall Street, you might have missed it: a glimmer of hope.

The light shone from Main Street, where people who own small businesses keep on doing business the best they can, because the only alternative is nailing up plywood and moving in with your parents or (egad!) your children.

The good news is the latest Intuit Small Business Employment Index, which shows that small-business hiring was up again in July. Small businesses hired 50,000 new employees in the month, continuing a trend that started back in October 2009. Since then, small businesses have created 715,000 jobs (which seems like 715,000 more than were created by that flock of crimson bloviators on Capitol Hill).

More encouraging, hours worked and compensation at small businesses were also up. “The recovery is still slow,” said Susan Woodward, who administered the Intuit index, “but these numbers show things are getting better, not worse.”

Small businesses: upbeat. In more good news from Main Street, the recent Business Confidence Survey by Insperity (which is either a consulting firm or a minty-fresh chewing gum) shows that 52 percent of small businesses think their sales this year will be better than last year. Thirty-two percent of respondents said they plan to add new employees, while only 6 percent said they’ll lay workers off and just 4 percent said they’ll cut pay.

The cash-flow factor. On yet another optimistic note, Riviera Finance, a major player in the invoice-factoring industry, says its business in the first two quarters of 2011 was up 27 percent over 2010.

That’s not entirely good news, of course. Yes, on the one hand, the rise in factoring means small companies are busy and need working capital. But on the other hand, it means small companies that need capital aren’t getting it from traditional sources like banks and are turning instead to factoring companies.

Americans with money aren’t spending it. The ongoing cock-and-bull story from some leaders (who are leading us where, exactly?) is that any sort of tax increase would kill jobs. This is, of course, nonsense, believed only by people who spend their afternoons squinting at Megyn Kelly’s fluorescent blonde hair.

Since the Bush tax cuts began uploading what’s left of middle-class assets to the mothership, employment has nosedived. But don’t worry, goes the argument. Keep their taxes low and big corporations will start hiring and rich Americans will start spending.

Neither is happening. Corporations are reclining on trillions in cash. And, reports regular correspondent Pam Danziger, who’s president of luxury-market think tank Unity Marketing, spending by the wealthy has dried up. Danziger’s Luxury Consumption Index shows spending by rich Americans on luxury goods and services in second quarter 2011 was off more than 18 percent from second quarter 2010 (which was not exactly a time of wine and roses).

You’d think these people would be spending. It’s not as if they’re short of cash. According to this piece by Nobel Prize-winning economist Joseph Stiglitz in Vanity Fair, the richest 1 percent of Americans now take home a quarter of all U.S. income each year and control 40 percent of the wealth. (Back in the 1980s those numbers sat at just 12 percent and 33 percent, respectively.) Meanwhile, the average income of people in the middle has dropped 12 percent. As Stiglitz points out, “in terms of income equality, among our closest counterparts are Russia with its oligarchs and Iran.”

Holy Shiite.