Small businesses are the lifeblood of the U.S. economy: they create two-thirds of net new jobs and drive U.S. innovation and competitiveness. A new report shows that they account for 44 percent of U.S. economic activity. This is a significant contribution, however this overall share has declined gradually.
U.S. gross domestic product (GDP) is the market value of the goods and services produced by labor and property located in the United States. Across the 16 years from 1998 to 2014, the small business share of GDP has fallen from 48.0 percent to 43.5 percent. Over the same period, the amount of small business GDP has grown by about 25 percent in real terms, or 1.4 percent annually. However, real GDP for large businesses has grown faster, at 2.5 percent annually.
The Office of Advocacy has sponsored research on small businesses’ contribution to GDP since 1980. In December 2018, Advocacy released the report, Small Business GDP, 1998-2014, by Kathryn Kobe and Richard Schwinn. A summary of the research is also available.
The previous installment in this research series was published in 2012.