It seems reports from Washington threaten a rise in interest rates almost daily. And while such a move by the Federal Reserve could have an adverse affect on small businesses, it may be comforting to owners to know that members of the august panel know how important their enterprises are to the nation’s economic health.
“Small business is very important to the U.S. economy,” Federal Reserve Board Gov. Edward Gramlich told a gathering at the First Small Business Conference, sponsored by Rep. Stephanie Tubbs Jones and the Cleveland State University College of Business Administration. “It’s hard to talk about the health of the economy and the health of small business separately, they’re so tightly tied up together.”
According to Gramlich, 99 percent of all companies, more than 23 million, are considered small business firms. They are responsible for half of the total output in the United States and are the first job for two-thirds of the work force. Small business is also responsible for half of all the innovations seen, he says.
“You can’t imagine a healthy small business sector if we don’t also have a healthy economy and vice versa. So probably the most important thing we can do for small business growth is just try to manage the link between small business and the economy, and make sure we continue our economic expansion,” he says.
On a local level, there are concerns. Northeast Ohio isn’t keeping up with the rest of the country in terms of employment growth from start-up firms
“There’s evidence that there’s small business investing here, but Northeastern Ohio is actually a bit behind the rest of the country,” Gramlich told the group.
Nationally, 46 percent of employment growth is derived from new companies, while in Northeast Ohio, the figure sits at just 40 percent.
But there is hope. The network is in place.
“It strikes me that you have an unusual amount of cooperation between the city, the banks and community groups,” Gramlich says. “The partnership is working well in the housing area. I saw a number of nice looking housing developments.
“There seems to be a wide coming together to advance the cause of home ownership. A comment that I heard was that there needs to be corresponding small business growth. People can live in houses, but they need places to work and they need places to shop, and that’s where small business comes in.”
Daniel G. Jacobs ([email protected]) is senior editor at SBN.