The U.S. Small Business Administration has recently released an updated report to a 1998-2010 study on the share of GDP which small businesses contribute to. The conclusions from this in-depth review shows that while small businesses have lost a portion of GDP, they are still an important part of the U.S. economy and account for a significant quantity of the total GDP. This recent analysis, by economist Kathryn Kobe, also highlights positive small business trends which may help to improve the ongoing small business economic recovery.

Findings from the GDP report include:

From 1998 to 2001, the small business share of GDP held steady at around 50% and only experienced slight downward trends.

After 2001, the small business share of GDP experienced a decline from just over 48% in 2002 down to 46% in 2008.

Data which is still being compiled for the 2009 – 2010 time period suggests that a further decline in small business GDP occurred. This data also indicates that larger businesses (with over 500 employees) experienced a quicker economic recovery while small businesses experienced a continuing decline in GDP share during 2010.

The construction industry in particular, which is largely composed of small businesses, has experienced a significant decline due to the effects of the downturned economy. The small business share of the construction industry shrunk from 88% in 1998 to approximately 84% in 2008.

Additional decreases in small businesses share of employment occurred in industries which include: wholesale trade, retail trade, transportation/warehousing and real estate.

However, even though the initial report may seem to underscore the effects of the recent recession on small businesses, positive conclusions were also revealed in the report’s highlights.

Throughout the last half of 2010, small businesses experienced the same net job gains as larger businesses. The gross job gains of small business during the latter half of 2010 surpassed the gross job gains of large businesses by 3 to 1.

While the construction industry has continued to affect the GDP share of small businesses, the health care industry has continued to increase its shares in the economy. Health care and social services which accounted for 7.2% of the U.S. economy in 1998 have grown to almost 9% of the total U.S. economy.

Because small businesses account for approximately 50% of the health care industry, the increase in health care economies can help to reduce the impact of employment losses in other small business sectors. From 1998 to 2008, small businesses also increased their share of employment in additional industries which include utilities and manufacturing/mining.


Kobe, Kathryn. (January 2012). Small Business GDP: Update 2002 – 2012. Retrieved from

U.S. Small Business Administration. “Small Business GDP: Update 2002-2010” Research Summary by Kathryn Kobe. (2012)

Tozzi, John. “Small Business Share of Economy, Job Growth Shrinks.” Bloomberg Businessweek. 1/31/2010.

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