How much longer will it take for the United States economy to fully recover from the financial crisis that occurred a few years ago? Well, there is no timeframe, but the U.S. central bank head said there is still a long way to go.
The text of Federal Reserve Chair Janet Yellen’s remarks to owners of small companies and officials from the U.S. Small Business Administration (SBA) in Washington was released Thursday in which she stated that the country will have a long way to go to fully retrieving a healthy economy that it once had.
According to her speech, Yellen explained that job creation will be a critical element to this process and that must be achieved by small businesses because they play a vital role to the national economy.
“America has come a long way since the dark days of the financial crisis, and small businesses deserve a considerable share of the credit for the investment and hiring that have brought that progress,” Yellen said. “Although we have come far, it is also true that we have further to go to achieve a healthy economy, and I am certain that small businesses will continue to play a critical role in reaching that objective.”
The Fed reduced its monthly bond-buying purchases by another $10 billion late last month to $45 billion. Minutes from the Federal Open Market Committee (FOMC) have revealed that further cuts are likely to occur. Interest rates, though, will remain the same until late next year.
State of Small Businesses
New data indicates that optimism among the small business community is improving and entrepreneurs have positive feelings about the economy over the next year, a Wells Fargo and Gallup Small Business Index survey found.
Optimism among small business owners reached its highest level in six years. The quarterly study, which was conducted between Mar. 31 and Apr. 4, discovered that the Small Business Index score moved upwards from January’s positive 45 to positive 47. Future expectations, meanwhile, stand at positive 33, the highest figure since the beginning of 2008.
“The trend of business owners feeling more confident each quarter is a positive sign, yet the level of improvement we see today remains small, and we’re less than halfway between the lowest point in our survey’s 10-year history and the highest levels of business owner sentiment reached in 2006,” said Lisa Stevens, Wells Fargo head of Small Business and Pacific Midwest regional banking president, in a statement.
This week, SBA Administrator Maria Contreras-Sweet announced that the organization will be introducing “growth accelerators” at post-secondary institutions and non-profit agencies to provide entrepreneurs with business plan assistance, start-up capital, networking, space and mentoring.
Small businesses are having a difficult time attaining funding from banks. William C. Dudley, president of the Federal Reserve Bank of New York, said at a conference Thursday that small loans from financial institutions are “flat” and this could be another hurdle that the U.S. economy could face since small businesses are an important aspect of the economic engine.