Business news networks and other financial media stay largely focused on covering companies whose shares are owned by the public. But away from the TVs and newspapers, there is another powerful engine pumping life into the economy: the middle market
This unsung sector is mostly made up of private businesses that together generate one third of U.S. private sector GDP. “Both in revenue growth and in jobs growth, these companies in the middle are leading the U.S. economy,” says Thomas A. Stewart, executive director of the National Center for the Middle Market (NCMM).
Stewart describes the U.S. middle market as a group of some 200,000 businesses with annual revenues ranging from $10 million to $1 billion. It includes well-known companies like Airstream, Edible Arrangements and King’s Hawaiian, and employs nearly a third of American workers. Lumped together, they would form the fifth largest economy with $4.3 trillion in GDP, behind Japan and ahead of Germany.
Top image: Airstream has been making trailers and RVs since the 1930s. Photo credit: Airstream
The Ohio State University Fisher College of Business and GE Capital founded the NCMM four years ago to serve as an expert on the segment. “It’s a giant group of companies, but they are largely overlooked,” says Susan Bishop, spokeswoman for GE Capital. “No one really talks about them.”
The center just released its quarterly Middle Market Indicator (MMI) tracking the sector’s health. The indicator is a blend of business performance updates and an economic outlook survey the center conducts among 1,000 middle market executives. The third quarter results detected a lot of energy in the sector’s engine room. Middle market revenues have grown for four quarters in a row, from a 5 percent increase in the fourth quarter of 2013, to a 7.5 percent increase in the third quarter of 2014. By comparison, S&P 500 companies grew 5.5 percent in the last quarter.
The middle market is also busy adding jobs, topping the 3 percent employment growth mark for each of the three quarters so far this year. The NCMM projects that at the current rate, the middle market will create 60 percent of all new jobs over the next year.
The segment also remains confident in the economy on the national level and somewhat confident on the local level. But its view of the global economy has grown more tepid.
The NCMM released the full results of the survey at the Middle Market Summit, which is taking place at Ohio State’s campus on Wednesday. This year’s lineup of guests includes former Massachusetts Gov. Mitt Romney, Ohio Sen. Rob Portman, AOL founder Steve Case, and GE Chairman and CEO Jeff Immelt. Past speakers included investor Warren Buffet, and President George W. Bush.
GE Capital is also sponsoring a special edition of MSNBC’s Morning Joe show, which will broadcast from the event between 6 to 9 a.m. on Wednesday. Morning Joe will also live stream this year’s Summit from 8:30 a.m. to noon ET at www.msnbc.com/morningjoe.
