Advocacy Releases 2010 Edition of The Small Business Economy
WASHINGTON, D.C. – 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.
A copy of the report is located at: http://www.sba.gov/sites/default/files/sb_econ2010.pdf and the research summary can be found at: http://www.sba.gov/sites/default/files/rs375.pdf .
Small businesses faced challenging economic conditions in 2009. However, by the end of the year, small businesses found room for optimism, according to a report released today by the Office of Advocacy. The report, the 2010 edition of The Small Business Economy: A Report to the President (http://www.sba.gov/sites/default/files/sb_econ2010.pdf), reviews the overall economic environment for small businesses in 2009.
“In the beginning of 2009 many small businesses felt as if they were at the brink, not knowing how or if they would survive,” said Chief Counsel for Advocacy Winslow Sargeant. “This report shows that the actions taken by the federal government were beginning to be felt in the small business economy by the end of the year, and that there were signs entrepreneurs were again looking ahead toward new opportunities for small business growth.”
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.
In 2009, the American Recovery and Reinvestment Act (ARRA) generated stimulus activity designed to benefit small firms, among others. The Congressional Budget Office estimated that 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. The American Express Open Small Business Monitor found that 55 percent of entrepreneurs were optimistic about the future of their businesses in September 2009, up 10 percent from earlier in the year.
Regarding small business lending in 2009, the quarterly Senior Loan Officers Opinion Survey on Bank Lending Practices showed tightening of lending standards and weakened demand for small C&I loans—figures that were more pronounced early in 2009 than later in the year.
The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed Chief Counsel for Advocacy advances the views, concerns, and interests of small business before Congress, the White House, federal agencies, federal courts, and state policymakers. Regional advocates and an office in Washington, D.C., support the Chief Counsel’s efforts. For more information, visit http://www.sba.gov/advocacy, or call (202) 205-6533.
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