GDP and Wealth: How Small Businesses Fare

Small businesses continue to generate half of the nation’s private non-farm gross domestic product (GDP), according to The Small Business Share of GDP, 1998-2004, recently released by the SBA’s Office of Advocacy.

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

The study is the first of its kind to use the North American Industry Classification System as the basis for analysis. The small business share of the GDP in the 16 major industries in 2004 ranged from 18% of the information sector to 85% of other services. Over the seven-year period studied, the small business share of GDP held steady at around 50%. However, there has been a long-term decline from the late 1950s when the small business share of GDP was approximately 58%.

The full study may be found at www.sba.gov/advo/ research/rs299tot.pdf.