New Small Business Growth Seen As Positive News For the Economy

Online, October 5, 2010 (Newswire.com) - Small business startups are the most important factor propelling overall state economic growth, according to a report released by the Office of Advocacy of the U.S. Small Business Administration (SBA).

The report, Small Business and State Growth: An Econometric Investigation, found that as the number of business startups in a state grows, so, too, does that state's gross product, employment rate, and personal income. More precisely, increasing small business startups by 5.0% results in a 0.47% increase in gross state product growth, a 0.44% increase in the employment growth rate, and a 0.40% growth in personal income.

This is precisely the reason that policy analysts are focusing their efforts on ensuring that entrepreneurs as well as existing small business owners have the incentive to pursue growth. It is widely forecast that over one-million small businesses are expected to add new positions to their job rolls in coming months - taking advantage of a newly established $5,000 tax credit.

President Obama, speaking in Charlotte, N.C., praised small business owners and entrepreneurs, saying, "... the true engine of job growth in this country has always been the private sector. What government can do is create the conditions...for companies to hire again." Obama added that Americans are still suffering from the job losses of the last two years, was optimistic that, despite the damage done to the labor market during the recession, the economy is poised to start adding the jobs people need. Hopefully he is right. While startup loans may be a useful short-term fix to help applicants survive the job-hunt and emerge with new positions, ultimately the unemployed are dependent on the economy to perform better than it has over the past few years.

So far, so good! The economy gained 162,000 jobs in the month of March, which represents the third increase in jobs over the past five months, and seems to indicate that the labor market has finally begun to stabilize, although the overall unemployment rate remained stubbornly high at an average of 9.7% nationwide.

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