While overall private employment has risen, firms with 1-49 employees have kept employment flat in recent months.

Figure 1: Private nonfarm payroll employment from CES (light blue), incorporating preliminary benchmark (bold blue), ADP (bold red), ADP firms 1-49 employees. Source: BLS, ADP via FRED, and author’s calculations.

In firms tracked by the NFIB, employment is down (per firm), although there’s enough seasonal variation, it’s hard for me to see what’s going on trendwise.

Source: NFIB, accessed 10/5/2024.

A differential impact between smaller and larger firms is not surprising; the financial accelerator suggests that tight monetary policy will affect credit collateral constrained firms more than others. A reasonable conclusion is that monetary policy might profitably be loosened, even if overall economic activity appears strong.

For more commentary, see Jan Groen,