Small businesses feel Wall Street's pain

Wall Street's hurt is swelling through U.S. small businesses, as bankers who once earned in million-dollar bonuses were cut from their jobs and slash back spending on everything from parties to home improvements.

Among those is Felice Pomeranz, a Boston-based harpist who has gone through two major recessions in 26 years and has never seen times so hard.

"This is the worst. It's terrible," said Pomeranz, a performer who also books other musicians to perform at corporate events. "Musicians are dying to work."

Bookings for corporate events by her company, Gilded Harps, dropped to as much as 70 percent from a year ago, with work for financial firms practically gone.

The major financial services firms that are not caving in like Goldman Sachs Group Inc, Bank of America Corp and Fidelity Investments are bracing up as they prepare for the worst, making headlines as they lay off thousands of workers.

"They are driving demand for all kinds of other industries -- whether it's home improvement, contracting, landscaping, furniture, entertainment, restaurants," says University of Massachusetts economist Michael Goodman. "Small business will bear more than its fair share of the pain."

Effect trickling down

Small businesses with 49 or fewer staff shed 25,000 jobs in October, the first time they had cut employment since 2002, according to figures from Automatic Data Processing Inc, the world's largest payroll processing company.

Budgets for big corporate events are down from last year.

"When the economy is like this, it turns into things that are not as expensive. It's no longer a tenderloin and shrimp party. Its beer and wine instead of a full bar," said Michele Stump, a manager at Boston's East Meets West Catering.

"People are hesitant to do anything expensive because of how it looks," Stump added. "It almost doesn't look right."

Some 3.9 million Americans are now extracting jobless benefits, a 25-year high, according to Labor Department data released on November 13.Retailers and restaurants -- about 90 percent of which are small businesses according to the U.S. House of Representatives Committee on Small Business -- are also feeling the pain