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The Recession Will End… When Small Businesses Steady Themselves

Says who: Mark Zandi of Moody’s Economy.com.

“Small business tends to lead the way out, and that’s just not happening here.” (via USA Today)

Why it might be false: It might be false because we might be due for a slight redefinition of “small business.” In recessions and other periods of some job loss, more businesses tend to be created. Entrepreneurs are energized, and others are just looking for a way to generate some income. In New York, laid off Wall Street executives have been launching companies in part through a Bloomberg-backed incubator funded with $45 million. In the state of Colorado, the number of new business registrations has increased over last year.

Why it might be true: Small businesses have accounted for employing about 70 percent of the workforce, yet stimulus and chummy big-brother efforts seem to have been more focused on Detroit and Wall Street. The loan program America’s Recovery Capital has sent but a trickle of funds to businesses in need, and the cost pressures of health care haven’t abated, and, rightly or wrongly, many fear they will only get worse with new legislation.

Our call: Yes, small businesses are suffering, and yes, they have provided much of America’s employment. But we think that the rules are changing and new types of working and business will sprout up as we evolve out of this downturn. In that case, we still need small businesses to steady themselves, but we may be able to achieve another kind of recovery that looks little like ones past.

Tags: economy, recession, Small Business, The Recession Will End..., Wall Street