PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Deeply Troubling Small Business Data

By at 29 June, 2021, 6:55 am

by Raymond J. Keating – 

Given that the pandemic is being fought off with vaccinations, and more and more limitations on assorted activities are being rolled back, the expectation and hope is that we will see a recovery on the small business front, which then would further feed overall economic growth.

But the data on small business is mixed, with the latest numbers from TracktheRecovery.org on the percent and number of small businesses closed being deeply troubling.

TracktheRcovery.org is a project supported by Harvard University, Brown University and the Bill and Melinda Gates Foundation. It offers estimates on the percent of small businesses that have been closed – whether permanently or temporarily – compared to just before the pandemic hit.

The latest estimate (see the following chart from TracktheRecovery.org) points to the number of open small businesses having declined by 44.1 percent as of June 19, 2021, compared to January 2020. That actually is the worst measurement since the onset of the pandemic.

Based on Census Bureau data, that would indicate that some 13 million small businesses are closed – again, temporarily or permanently – including 2.6 million small employers, compared to January 2020.

If this estimate is even in the ballpark, it points to the pandemic and its fallout continuing to inflict serious damage on small businesses.

However, two other key datasets counter these grim TracktheRecovery.org numbers.

● First, new business applications, a measure of future business formations, have been running since May 2020 in territory far higher than what prevailed prior to the pandemic.

● Second, the May 2021 jobs report showed the number of unincorporated self-employed jumping notably higher, hitting a level not seen since August 2008 (see the SBE Council brief).

Again, let’s hope that the more future-focused indicators turn out to be right, and the small business community can put the harsh effects of the pandemic behind us and look forward to expanding opportunities.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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