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More than two-thirds of small startups firms face financing shortfalls and see their applications for credit rejected at a higher rate while some others receive only some of the funds they request.
More than two-thirds of small startups firms face financing shortfalls and see their applications for credit rejected at a higher rate while some others receive only some of the funds they request.

Economy Less Rosy Than Trump Claims

The US economy continues to bumble along at a subpar pace. And there is little evidence that Trump’s policies have had much effect on the economy

Economy Less Rosy Than Trump Claims

US President Donald Trump touts the economy every now and then, taking credit for the stock market’s record rise and the few jobs deals he’s negotiated. But a closer look at reality reveals a much gloomier picture.
If you happen to own stocks, no doubt you have richly benefited from the market’s record rise in the past six months. If you’re among the millions of lower- to middle-class Americans struggling paycheck to paycheck, or still without a job, it’s a very different story, news outlets reported.
Also small startup firms are struggling to find sufficient financing to expand.
Too many people are still hurting and tightening their belts, and nowhere was that more evident than in June’s US Commerce Department’s income growth report. It showed that consumer spending is turning in its weakest performance in seven months.
Incomes were flat in June and barely registered 0.3% growth the month before. Spending slowed to a crawl, inching up 0.1% in May.
Under ex-president Barack Obama, economic growth seemed locked into the 2% range year after year, and this year looks no different. The gross domestic product, the broadest measure of how the American economy is doing, rose an anemic 2.6% in the second quarter from April through May, up from 1.2% in the first quarter.
Another indication of the economy’s weakness can be seen in the auto industry. US carmakers reported bleak numbers Tuesday that showed car and light truck sales declined for the fifth month in a row, according to Autodata, which tracks the automotive industry, stwnews reported.
Ford said its sales fell 7.5% in July, while Fiat Chrysler’s sales plunged 10%.
Another sign of the economy’s weakness can be seen in rising inventories in retail and wholesale products. The commerce department reported that both were up by 0.6% in June among durable and nondurable goods.
But rising “inventories can send mixed messages—one of confidence, in that companies are getting products to eventually sell, but also one of tepid demand,” says MarketWatch.
And “demand appears to have tapered off a bit ... as the White House’s agenda gets bogged down in Washington,” the economic website reports.
Moreover, before the Republicans can turn to tax cuts, they must pass a new budget by the end of September to avoid a government shutdown. At the same time, there will be a bitter fight over a debt limit bill on just how much the US Treasury can borrow to keep the government funded over the next year or two.
Meantime, the US economy continues to bumble along at a subpar pace. And there is “little evidence that Trump’s policies have had much effect on the economy,” writes economic analyst Ben White in Politico.

 Financing Shortfalls
Small startup firms, which are key to US job growth, are struggling to find sufficient financing to expand, according to a survey released Tuesday, AFP reported.
Startups were much more likely to face financial shortfalls even though their need for funds is smaller than that of more mature small companies, the New York Federal Reserve Bank said in its latest survey.
These firms, defined as less than five years old, also are “more likely to be higher credit risk,” in an economy where banks are gradually starting to loosen the tight reins on lending following the global financial crisis.
“These findings are particularly salient for the US macroeconomy because startups account for 34% of all US employer firms, for nearly all net new job creation and for almost 20% of gross job creation,” the New York Fed said, citing outside research. They also “play an outsized role in US innovation and productivity.”
As more than two-thirds face financing shortfalls, these firms see their applications for credit rejected at a higher rate and many more startups receive only some of the funds they request—41% compared to 33% for older businesses.
Startups were twice as likely as mature firms to add jobs and grow revenues (43% compared to 22%), and were also much more optimistic than mature firms about future revenue and employment growth, the report found.

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