Harvard report: Main Street has starkly more negative views of economy than big biz does

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Main Street USA is getting pummeled.

America's economic performance peaked in the late 1990s, according to a new report on the competitiveness of the U.S. economy from Harvard Business School.

Since then, there has been an ever-widening income disparity in the U.S., and that same divide has been growing between large and small businesses, the report finds.

"Corporate profits in America remain near all-time highs, though revenue and profit growth has slowed. But many small businesses are struggling," the report says.

The smallest businesses, those with between one and nine employees, reported having "starkly more negative views" of the business environment than their larger counterparts.

"Across the board, the U.S. business environment looks worse from the vantage point of small business," the report says.

Long deemed the engine of America's job growth, small businesses have lost that distinction. Since 2000, businesses with more than 1,000 employees have had a much faster rate of job growth than those with fewer than 100 employees. And those businesses with fewer than 10 employees have been adding jobs at the slowest pace, the report found.

To be sure, Main Street does not run through Silicon Valley. High-tech, high-growth start-ups are not suffering the same plight.

"We also find a sharp divergence in new business creation between the continued success of technology-based start-ups, in places like Silicon Valley, New York and Boston, and the weaker prospects for the average new business across America, and across local and traded industries," the report says.

Half of new business job growth between 2010 and 2014 was in 20 counties, according to data from the Economic Innovation Group, cited in the Harvard Business School report.

As small businesses are being lapped by the rest of the U.S. economy, the political discourse surrounding the national election has been divided and polarizing. That, the authors of the report say, is not a promising sign for improvement.

"To us, the confused national discussion about our economy and future prosperity in this election year is our worst nightmare," they say. "There is almost a complete disconnect between the national discourse and the reality of what is causing our problems and what to do about them.

"This misunderstanding of facts and reality is dangerous, and the resulting divisions make an already challenging agenda for America even more daunting."