The 2009 edition of The Small Business Economy documents the 2008 recession’s effects on small business as well as their role in the 2008 economy. The report includes chapters focusing on the state of small business (with brief subsections on small business challenges such as health care and globalization, as well as contributions in job creation and innovation) and financing. Appendices include additional data on small firms and a summary of Advocacy research published in 2008.
• Small businesses in most industries, especially in the construction industry hard hit by the housing market downturn, saw declines in employment.
• Average unincorporated self-employment fell from 10.4 million in 2007 to 0.1 million in 2008 and averaged 9.6 million by November and December 2008.
• Incorporated self-employment remained steady at 5.8 million on average over the 2007-2008 period.
• Some surveys found small firms expressing less willingness to expand, hire new workers, invest in new plant and equipment, or borrow money, at least in the near term.
• Health care costs remain a major concern for small firms: according to the Kaiser Family Foundation, the average annual cost of a family premium for employer-sponsored health insurance increased 119 percent between 1999 and 2008, with a 5 percent increase in 2008 from the previous year.
• Real exports have risen steadily since 2005, outpacing the growth in imports; the value of real exports increased 6.2 percent in 2008.
• Most small businesses faced a less accommodating credit market, especially in the second half of 2008.
• Lenders exhibited widening interest rate spreads and tightening terms of lending.
• Business borrowing plunged in the fourth quarter of 2008 to a low annual rate comparable to the levels experienced in the 2001 recession.
• According to June 2007-June 2008 Call Report data, developments in the financial markets had a limited impact on small business lending in the first half of 2008.
• Despite the lack of very current financial data, a number of indicators suggest that the flow of funds to small firms was much curtailed by the end of 2008.
A copy of The Small Business Economy: A Report to the President 2009 can be found here (PDF) and the research summary can be found here (PDF).