Which way goes the economy? I have some insights based on a very reliable source – the lifeblood of American capitalism.

The National Federation of Independent Business does a small business confidence survey that’s closely watched by economists. Right now, small businesses report they’re feeling much better about things. Confidence is up a fair amount. Some entrepreneurs say they’re looking to hire and expand their business.

The reality is smaller businesses were in a crouch position for the last five years just trying to survive. The efficient have survived while their competitors, one by one, fall by the wayside. Those survivors are now poised to grow, although any of a number of small businesses haven’t regained their pre-recession sales numbers. But they are in growing mode again -- not all, of course, but many of them.

Think about it like this: Why did dinosaurs go extinct? As they got bigger and bigger, their brains got smaller and smaller, just like big companies. In my experience working for a big company, the bureaucratic quotient is inversely proportion to the IQ of the organization. As the company gets bigger and more bureaucratic, it gets dumber.

So if you want to see what gives life to capitalism it’s the innovative entrepreneur who risks it all to go out and start a business. His or her productivity, how hard he or she works, is so much greater when it’s their own organization and their own money at risk. That impulse, that drive, is so hard to create in a corporate environment.

When I look for the trends in where we’re headed economically, I’m interested in what the small, lean hungry business is doing, not what the big fat company is doing.

Image of Clark Howard About the author: Clark Howard

Clark Howard is a consumer expert whose goal is to help you keep more of the money you make. His national radio show and website show you ways to save more, spend less and avoid getting ripped off. View More Articles

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