Is the recession really over? Not so, according to many business owners. US Bank conducted a survey of over 1,000 small business owners, and 71 percent replied that the Great Recession was still here three years after it ended.
Starting in late 2007, the Great Recession destroyed several top banks, crashed the stock market and doubled the ranks of the unemployed. It did end some eighteen months later in the summer of 2009. Since then the economy has grown slowly, so why the mixed signals?
The confusion may stem from the language used by business owners and economists. The National Bureau of Economic Research decides when recessions begin and end. This is measured by economists as several months of lower economic activity involving wholesale and retail sales, real income, industrial output, employment and gross domestic product.
This is not how people perceive economic conditions. Although the economy may be improving ever so slowly, less than full employment appears like the country is not doing as well as it could. Opinions by business owners are also greatly affected by daily headlines of high unemployment and stock market tumbles. The mundane business cycle projections are more difficult to understand, thus getting less publicity. Since people see their stock market and 401K earnings being less than they were, they assume the recession continues.
There is no denying that the real estate and construction downturn has adversely affected many small businesses. The financial collapse resulted in a tighter credit market, which also devastated many business owners. Large businesses are still able to get financing through capital markets. In spite of all this gloom, about 69 percent of small business owners surveyed by US Bank report that their finances are in good shape. This is something they can understand far better than economic forecasting.
Read more at Bloomberg Business Week.
