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December 23, 2021

The quagmire of small business recovery

There may be no better barometer for our recovery from recession than the small business.

Save for shellacked labour workers, vendors operating their own modest company are often ravaged worst by the pitfalls of a downturn: vanished consumer spending, reluctance by banks to loan cash, etc.

But while data released Monday from Stats Canada suggests the small business is well on its way to a rebound, startling numbers out of the U.S. make you question how strong the return to normal actually is.

According to StatsCan, two landmark economic indicators posted increases in October – retail sales rose by 0.8 per cent to reach $35.3-billion and the Index of Consumer Confidence now stands at 82.8, 26.2 points higher than it was back at the start of 2009.

The most encouraging figure? Perhaps that retail sales volumes, with an increase of 0.6 per cent in October, are finally back to pre-recession levels.

Hopeful numbers? You bet. Consider, though, the grim state of the small business south of the border.

In California, small business bankruptcy numbers peaked in September when 2,229 filed for protection, up from 1,503 from that same month in 2008.

In the 12 months ending in September, 2009, a devastating 19,000 small businesses filed for bankruptcy, up 10,500 from the previous year.

“I still feel scarred and like a loser,” said one Cold Stone Creamery franchisee that was recently forced to close up shop.

So, the question stands: which representation of the state of small business is likely to endure going forward?

The true condition of things is likely somewhere in between the two, but until banks ease their stance on loaning money, who’s to say if improved consumer spending is enough to keep small businesses afloat during the recovery?

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...