Small businesses dig in heels as recession bites
By Lucia Mutikani
WASHINGTON (Reuters) - Vanessa Baug knows as well as anyone how the recession has ushered in a new era of frugality for Americans. Sales at her once-thriving jewelry store have plummeted. Some days she sells nothing.
"When times were good we were seeing 50 percent more traffic than we are seeing now" at Baug's Vanessa Fine Jewelry in Lakewood Ranch, Florida, she said. She will fight to the bitter end to keep her store open, she said, and is taking on more jewelry repair orders to keep cash coming in.
Margaret Van Voast, who runs a construction management outfit in Falls Church, Virginia, has also seen a decline in contracts. She has downsized her staff to one from four and has enough work to last until the end of the year.
"We are just looking around for other opportunities, things we can do for backlog going into 2010," said Van Voast.
The deep and protracted recession, prompted by the worst global financial crisis since the Great Depression, has chilled activity in most U.S. industries and slashed Americans' discretionary spending. Owners of small business, especially in the hard-hit retail and home construction sectors, are marshaling all of their resources to survive.
Since the start of the downturn in December 2007, over 5 million jobs have vanished, and analysts say unemployment is set to continue rising well into 2010 -- even after the economy ceases contracting. The jobless rate hit a 25-year high in March of 8.5 percent, and is expect to go higher when the rate for April is reported May 8.
Economists said soaring unemployment was the reason small businesses were trying to keep doors open even as demand for their goods and services fell.
"The challenge for millions of families is you cannot simply give up," said Heather Boushey, a senior economist at the liberal Center for American Progress in Washington. "People need employment to pay the rent and mortgages. As individuals, they cannot give up. They don't have that luxury." Continued...