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Small Business Big Player

May 21st, 2007


Small business generates 50 percent of the private, nonfarm GDP in the United States, according to the U.S. Small Business Administration.


“Small business plays a big role in our economy,” said Dr. Chad Moutray, Chief Economist for the Office of Advocacy. “This study confirms just how important small business is to our economic growth and prosperity.


“It makes clear that economic policy needs to take into account the needs of small businesses, because those businesses drive our economy,” Moutray said, advising executives across all sectors to take note of small businesses’ role.


“The Small Business Share of GDP, 1998-2004,” written by Katherine Kobe of Economic Consulting Services, is the first study of its kind to use the North American Industry Classification System as the basis for analysis.


Use of this system allows the small business share of total GDP to be categorized into 16 major industrial sectors. The small business share of the GDP in each major industrial sector in 2004 ranged from 18 percent of the information sector to 85 percent of other services.


Over the seven-year period studied, the small business share of GDP held steady at around 50 percent. However, there has been a long-tern decline from the late 1950s when the small business share of GDP was approximately 58 percent.



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