Where Will the Jobs Come From? Not Small Business, Not Venture Capital, Not (Much) Manufacturing

David Goldman continues to present the bear case convincingly. Below I’ve just excerpted from his analysis two key Fed charts.

Pardon my gloom, but it’s not clear to me where an employment recovery will come from–at least in the United States. All the indicators we have show that employment is scraping along the bottom. With 20% of the United States working-age population un- or underemployed, according to the Gallup Poll’s massive survey of 20,000 households, and establishments running at bare-bones level, it would be hard to envision significant declines in payroll employment from already miserable levels. But the sort of things that generate jobs–venture capital investments, small business expansion, and so forth–are as dead as the Monty Python parrot.

(…) Macroeconomists who expect a normal business cycle have misunderstood the nexus between small business expansion and real estate. A small business owner starts by using her home as collateral for a business loan, and then buys commercial real estate and levers it further. With the continuing catastrophe in both the residential and commercial real estate markets, small business capital has imploded. And small business surely isn’t getting help from the banking system, where loans still are contracting at the fastest pace on record:

And the decline of total commercial credit from the banks remains off the charts: