Like big bears hovering over the waterline picking off salmon swimming upstream, the economy is not much of a friend to small business. As you probably realize, small businesses generated 65% of the job growth between 1993 and 2008, and represent about half of the private-sector employment in the U.S., according to the Small Business Administration. “Smaller firms, with fewer than 20 employees, account for 25% of all jobs, but they generated 40% of the [job] growth in the last expansion in 2001,” says Joseph Brusuelas, a director and senior economist at Moody’s Economy.com.
Nouriel Roubini, the NYU economist, writes in a column published in BusinessWeek that the small business economy, is still mired in an “deep and persistent recession”. In fact, a Goldman Sachs analyst recently explained that small business sentiment is out of line with other measures of the economy, like GDP.
What’s the answer? A recent meeting of chief executives concluded that efforts need to center on getting more credit to small and mid-market businesses. The CEOs argued that the main impediment to a faster economic recovery was the high level of unemployment and called for ensuring that credit was available to jump-start hiring, with an emphasis on smaller businesses. I seriously doubt that’s the holdup and am inclined to agree more with the NFIB Chief Economist. (more…)