Small businesses contribute to 44% of overall GDP

Small businesses created $5.9 trillion, or 43.5%, of the $13.6 trillion private non-farm US economy in 2014. This followed 16 years of uneven nominal growth averaging 3.3% per year. SGDP stagnated briefly in 2001, declined $213 billion during the great recession, and did not recover to pre-recession levels until 2011. The small business share of the economy fell from 48.0% in 1998 to 43.5% in 2014 due to faster nominal growth for large businesses of 4.8% versus 3.3% for small businesses.

Figure 1 displays SGDP over time, the shaded bars highlight recessions. SGDP stagnated briefly in 2001 and declined steeply between 2007 and 2009. SGDP did not recover to 2007 levels until 2011. SGDP was $3.4 trillion in 1998 and grew 71.9%, or 3.4% annually, to $5.9 trillion in 2014. The full series, including industry-level breakdowns, is provided in the Appendix A. 2.2

Figure 2 shows that the share of GDP attributable to small businesses declined from 48.0% in 1998 to to 43.5% in 2014. The share fell sharply small business gdp, 1998–2014 4 1 For research purposes, the Office of Advocacy defines a small business as an independent business having fewer than 500 employees. For the industry-level definitions of small business used in government programs and contracting, see https://www.sba.gov/document/support– table-size-standards. The terms GDP, SGDP, and large business GDP refer to private non-farm nominal GDP and thus exclude owner-occupied housing, government, and agriculture unless otherwise noted. Including these sectors, total value-added GDP was $17.4 trillion in 2014. $0 $1T $2T $3T $4T $5T 1998 2002 2006 2010 2014 Figure 1: Small Business Nominal GDP, 1998-2014 in 2000 and 2005 and declined steadily in most other years. However, the overall level of SGDP rose throughout the period. Therefore the declining small business share is attributable to the markedly faster growth of large business GDP.