New businesses decline in Vermont in 2008

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(Host) Far fewer businesses were started in Vermont last year and the year before as the economy began to slide into recession.

State officials say the number of companies that folded was also up in 2008.

VPR’s Ross Sneyd has more.

(Sneyd) Economic statistics hold little good news these days.

Here are a few more numbers that might underscore the depth of the recession.

8,600 new companies were formed in the state during 2008. That’s the fewest in the past six years. And 2008 was the second consecutive year where the number declined.

And the number of companies that went out of business last year also began to rise … from 867 in 2007 to 941.

(Markowitz) "I’m actually deeply concerned about this.”

(Sneyd) Secretary of State Deb Markowitz is in charge of keeping the statistics.

(Markowitz) "This is meaningful. This data is meaningful. … What our business-start data tells generally is the confidence Vermonters feel in our market and the ability of Vermont to allow a new business to start and perhaps turn a profit. It really marks the confidence Vermonters have in our economy.”

(Sneyd) Economists say the statistics might be an indication of the deepening recession, but they’re unreliable.

New businesses often fail within a few years, regardless of the health of the economy. And even though the numbers were down last year, there still more new businesses formed in 2008 than a decade ago.

Economists say they often see new businesses start up in a recession because of what they refer to as “forced entrepreneurship.”

That happens when somebody loses a job and decides to open a business.

Secretary of State Markowitz says what concerns her is there appears to be less of that trend in this recession than there’s been in the past.

(Markowitz) "What’s different now is anybody with savings, anybody with investments have felt a real significant loss to those investments. So it’s hard to think about investing them in a new business enterprise when you look at your accounts and see that you’ve lost a third already just with the market downturn.”

(Sneyd) She believes that people are also less inclined to borrow for a new business right now … or they might not even be able to get a loan.

For VPR News, I’m Ross Sneyd.

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