In a couple weeks, the Office of Advocacy will release the next edition of our quarterly indicators for small business. Much of that document will hinge on what we learn from the first quarter 2009 real gross domestic product (GDP) figures, which will be released on April 29. Given the severity of the recession, I would not expect these numbers to show much improvement.
The National Association of Business Economists (NABE) earlier this week released an industry survey (members only access) showing that 93 percent of economists felt that real GDP would decline for the year as a whole. With that said, the survey also suggests that declines in the economy are “abating.” According to Sara Johnson of IHS Global Insight, “Key indicators — industry demand, employment, capital spending, and profitability — are still declining, but the breadth of the decline is narrowing.”
There are a couple surveys out which show that there are “glimmers of hope.” Last month, the University of Maryland’s business school and Network Solutions introduced the Small Business Success Index. According to its respondents, 67 percent were planning to invest in their businesses this year, bucking the recession; moreover, the small business owners in this survey tended to be optimistic, with nearly half suggesting that the economy will remain unchanged or improve in 2009.
This finding is also in the American Express Open Small Business Monitor, which finds that four out of ten entrepreneurs are both optimistic about the economy this year and feel that the economy provides opportunities for their businesses. That is not to suggest that there have not been hardships. Sizable portions of its respondents have had to take drastic steps such as instituting pay and hiring freezes and other ways of cutting costs.
However, despite the cautiousness in the down economy, there is also cautious optimism. I was personally struck by this finding in the American Express survey; 37 percent said that the economy had presented them with opportunities. Moreover, nearly “all of these glass-half-full entrepreneurs (92%) say that managing through the recession has made them a better business owner, compared to 77% overall.”
That is an impressive finding, and one that suggests that even in tough times, entrepreneurs are able to adjust to make the current environment work for them. That should give us all hope for our future.
— Chad Moutray, Chief Economist