The United States lost 2.6 million jobs in 2008, the greatest decline in annual nonfarm payrolls since 1945; meanwhile, the unemployment rate has crept up to 7.2 percent. Later this week, the Bureau of Economic Analysis will release what most economists expect to be horrible gross domestic product figures for the fourth quarter of 2008. In other words, the economic recession is severe, and the numbers appear to be bearing this out.
Looking forward, though, we would expect for there to be more entrepreneurship taking place as a result of this economic downturn. Much of that will be out of necessity; the talent pool of those who are being laid off is such that they are capable of selling those talents as their own boss, if they so choose. Moreover, many of these individuals might have contemplated becoming self-employed for some time, but they were not willing to strike out on their own and forego the benefits of their existing jobs. Unemployment changes that, providing an opportunity to pursue those dreams. Looking back at past recessions, it is definitely true that smaller businesses were able to recover sooner than their larger counterparts.
From my perspective, with the largest single concern from small business owners being poor sales, small business owners (both new and existing) will need a strengthened economy to flourish. Even those who will use this time to their advantage, in other words, should hope for an economic recovery to prosper. That is the biggest challenge of all right now.
— Chad Moutray, Chief Economist