This study confirms just how important small business is to our economic growth and prosperity. It makes clear that economic policy needs to take into account the needs of small businesses, because those businesses drive our economy.
Dr. Chad Moutray, Chief Economist, Office of Advocacy

Small business is a big contributor to the nation’s economy, generating 50 percent of the private, nonfarm gross domestic product (GDP), according to the Office of Advocacy of the U.S. Small Business Administration based on a recent study.

“Small business plays a big role in our economy,” said Dr. Chad Moutray, Chief Economist for the Office of Advocacy. “This study confirms just how important small business is to our economic growth and prosperity. It makes clear that economic policy needs to take into account the needs of small businesses, because those businesses drive our economy.”

The Small Business Share of GDP, 1998-2004, written by Katherine Kobe of Economic Consulting Services with funding from the Office of Advocacy, is the first study of its kind to use the North American Industry Classification System (NAICS) as the basis for analysis. Use of this system allows the small business share of total GDP to be categorized into 16 major industrial sectors. The small business share of the GDP in each major industrial sector in 2004 ranged from 18 percent of the information sector to 85 percent of other services.

Over the seven-year period studied, the small business share of GDP held steady at around 50 percent. However, there has been a long-tern decline from the late 1950s when the small business share of GDP was approximately 58 percent.