Tuesday, February 01, 2011

The State of Small Business

The 2010 edition of The Small Business Economy documents the 2008 recession’s effects on small business as well as the changing economy at the end of 2009. In 2009, after weathering a deep recession that began in late 2007, the American economy began to stabilize. For small businesses, one of the biggest remaining challenges was the lack of sales adequate to grow employment. Many economic indicators began to show improvement by year’s end.

For example, in the first three quarters of 2009, small businesses accounted for almost 60 percent of the net job losses, with the greatest losses in the first quarter. By the third quarter, net small firm job losses were one-third what they had been in the first quarter. The Congressional Budget Office estimated that the American Recovery and Reinvestment Act and other policy actions added between 1.5 percent and 3.5 percent to real gross domestic product in fourth quarter 2009 and projected an employment increase of 1.0 million to 2.1 million more than it would have been without the stimulus. In the first half of 2009, as the economy continued to experience the challenges that began in the last two quarters of 2008, credit markets were constrained by both demand and supply factors. In the midst of a challenging year for small business owners, there was reason for optimism as commercial bank profitability improved and nominal interest rates remained low.

The research summary can be found HERE.

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