Entrepreneurial

The U.S.’s latest GDP figures show the economy is growing at its fastest pace in years, but small businesses are still reeling.

According to government data, U.S. 2009 fourth-quarter GDP grew at a 5.6-percent clip – the fastest pace since 2003. Government stimulus, greater exports and less-severe reductions in business inventories have been credited with the growth, but data from Sageworks, which compiles financial information on privately-held companies, paints a far bleaker picture for small businesses.

Drew White,  Sageworks’s chief financial officer, said the survey results representing “tens-to-hundreds of thousands” of U.S. privately-held companies, showed a marked decline in 2009 revenues. White said 2009 fourth-quarter sales, by small private businesses with less than $10 million in annual reported revenues, were down 6.4 percent (see the full report). That was a significant decline from the previous year, when 2008 fourth-quarter sales increased 2.4 percent. Pre-recessionary 2007 figures showed an increase of 5 percent. As a barometer, White said a 3-percent growth rate was “reasonable.”

“Seeing a 6-percent decline is pretty dramatic,” admitted White, who noted it was a good indicator of the degree to which small businesses have been hammered during the current recession. “It’s almost like a 10-percent differential – huge.”

White said as long as consumers refrain from spending, small businesses will continue to remain in survival mode, which likely means reductions in overhead, such as payroll and advertising.

– Marshal Cohen, chief industry analyst of The NPD Group, Inc., is a nationally-known expert on consumer behavior and the retail industry. The views expressed are his own. —

These new credit card regulations should be viewed as a big step forward… and they are indeed a big step forward for consumers, especially as they are forced to confront the realities of their credit cards.

As these new credit card regulations go into effect, I hope that they will in fact help consumers manage their credit card debt more effectively. Yes, these changes are a step in the right direction, they inform and empower consumers to manage their credit better. But they still don’t replace the importance of ensuring consumers fully understand how credit cards work.

All those pundits who declared the current recession dead and buried, obviously haven’t been talking to small business owners.

Chapman University economists are the latest to announce the official end of the recession – with the codicil that the recovery will be more tortoise than hare.

In stark contrast to that report is the latest National Federation of Independent Business survey that shows small business confidence is locked in a downward spiral, that is worse than at any time during the last big recession in 1981-82.

This week we're getting inside views from some of the biggest names in retail...from high-end fashion houses like Hermes to department store chain J.C. Penney. Optimism among those in the industry about a turnaround toward the end of 2009 springs eternal...but what are you seeing? Where are you spending? Or, are you trading down? Ditching Saks and heading to Target? Barclays retail analyst Bob Drbul says the key for consumers in the current economic environment, no matter where they shop, is "value." Click here to hear his thoughts:

Are you changing your buying behavior? from Reuters TV on Vimeo.