Small Business Economic Conditions Strong, Steady In Q2

WASHINGTON, D.C. - Small business economic conditions were strong and steady in the second quarter of 2005, according to the Office of Advocacy’s newly released Quarterly Indicators: The Economy And Small Business. The economy has now experienced nine consecutive quarters of real gross domestic product (GDP) growth of over 3 percent.

“The economy stayed strong and steady in the second quarter of 2005 as real growth continued at over three percent,” said Dr. Chad Moutray, chief economist for the Office of Advocacy. “Industrial production and proprietors’ income both continued to grow and small business optimism remained high.”

In the second quarter, interest rates continued to increase, reflecting the Federal Reserve’s efforts to stabilize the growing economy. Nonetheless, the Senior Loan Officers Survey showed the demand for small business commercial and industrial loans remained strong, while at the same time venture investment deals grew, reaching $5.8 billion.

The price of West Texas crude (a benchmark for oil) reached $56.26 a barrel in June, an increase of nearly $2 from March and significantly higher than the average in previous years. However, despite high energy costs, consumer and producer prices rose only modestly in the second quarter.

The Office of Advocacy, the “small business watchdog” of the government, examines the role and status of small business in the economy and independently represents the views of small business to federal agencies, Congress, and the President. It is the source for small business statistics presented in user-friendly formats and it funds research into small business issues.

The Quarterly Indictors series, which started in the first quarter of 2004, is available on the Office of Advocacy web site at www.sba.gov/advo/research/sbei.html.