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Economists Predict Short Term Struggles, Long Term Growth

Written by Ken Gaebler
Published: 6/13/2011

Wall Street Journal Forecast gloomy on short-term employment rate and GDP growth.

While good news for small business owners has been in short supply, the latest Wall Street Journal Economic Forecasting Survey does anticipate growth, albeit slow, in the second half of 2011. But the June forecast is less optimistic than the May forecast on both employment and GDP.

Small Business Struggle

May’s prediction of a 12-month increase of 2.5 million jobs was down this month to a prediction of 2.2 million. Still, the predicted unemployment rate for December 2012 is 7.9 percent, down from a current rate of 9.1 percent.

Small business might drive this job growth. The MerchantCircle Merchant Confidence Index released on June 9 showed 90 percent of the small business owners surveyed plan to maintain current employees or hire in the near-term.

Second quarter GDP growth of 2.3 percent is predicted by June’s Wall Street Journal report, which is down dramatically from May’s prediction of 3.2 percent growth. However, more robust growth is anticipated to occur by the end of the year.

Again, small businesses might be positioned to contribute to this trend. Bloomberg News reported on June 9 that the number of business development corporations being formed by Wall Street firms is at its highest level since 2004. BDCs invest heavily in small business ventures.  

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