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Non-Financial Non-Corporate Business’s Contribution to GDP





Source: Created from data from the Federal Reserve Flow of Funds report.

Non-farm, non-financial sole proprietorships and partnerships accounted for a higher fraction of U.S. gross domestic product in 2013 than in any year since 1980, federal government data reveal. Although the Great Recession on non-corporate businesses drove down the non-corporate, non-financial business sector’s share of gross value added from 18.0 percent in 2007 to 17.1 percent in 2009, the subsequent economic recovery has pushed the contribution to economic value of non-farm non-financial sole proprietorships and partnerships back to 18.7 percent of the total.

The share of gross value coming from the non-farm non-corporate non-financial business sector is substantially higher now than it was in the 1980s and 1990s. As the figure above shows, the fraction of U.S. economic value added coming from non-farm, non-financial sole proprietorships and partnerships fluctuated between 14 and 15 percent for most of the 1980s and 1990s. Then in 2000, it began to rise, increasing from 14.5 percent at the beginning of the decade to 18.0 percent in 2007.

The gross value added by the non-corporate, non-financial non-farm sector declined by less than many other sectors of the economy during the Great Recession. Between 2007 and 2009, U.S. gross value added fell by 0.8 percent, as the country experienced the largest economic downturn since the Great Depression. The gross value added of financial corporate businesses declined by 4.8 percent, and that of financial businesses by 5.0 percent, but the gross value added of non-financial non-corporate businesses went down by a more modest 1.9 percent.

(The gross value added of other sectors of the economy actually grew during the Great Recession. Between 2007 and 2009, the gross value added of the federal government increased 10.5 percent, while the gross value added of state and local governments went up 7.7 percent and the gross value added of households rose 9.4 percent.)

The Great Recession ended and the economy began to grow again in mid-2009. Between 2009 and 2012, overall gross value added increased 13.4 percent. Several sectors increased at a lesser rate. Federal and state government gross value added increased 7.2 percent and 5.1 percent, respectively. Households’ gross value added rose 5.8 percent. And financial businesses’ gross value added rose 7.3 percent.

Nonfinancial non-corporate businesses and non-financial corporate businesses were the two sectors whose gross value added rose faster than average, increasing 17.8 and 17.3 percent, respectively, in the post-recession years.

Image: Created from data from the Federal Reserve Flow of Funds report.

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Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

One Reaction
  1. Okay that’s for 2013? How about 2014?

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