The latest Gross Domestic Product report indicates that the American economy is maintaining steady growth, expanding at a rate of two point three percent annualized for the last quarter of 2024. This follows a three point one percent growth rate in the previous quarter. Strong consumer spending, which contributed nearly three percentage points to the overall figure, remains robust due to low unemployment and rising real wages. Notably, spending on goods surged by six point six percent, marking the fastest quarterly growth since the pandemic recovery, while service sector spending rose three point one percent. Despite some sectors slowing down, such as business investments, which fell by two point two percent, the economy shows resilience, with evidence suggesting a strong demand, particularly in the auto industry.
A article from The Washington Post examines whether America remains a nation of small businesses. While small businesses make up about sixty percent of American businesses with fewer than five employees, a shift has occurred since the Great Recession. Now, fifty-three percent of Americans work for companies with five hundred or more employees, a stark contrast to past decades. A key quote: “The rule applies across the economy — the smaller the business, the slower the growth. But the real drivers of this economy-wide shift sit at the extremes: Businesses with fewer than 100 employees have steadily lost ground while business with more than 10,000 employees have gained.“
Stacy Mitchell of the Institute for Local Self-Reliance highlights that the decline of small businesses stems from policy decisions that favored larger corporations since the 1970s. In addition, the article notes that while the restaurant industry has seen significant growth, with an eighty-six percent survival rate for new restaurants from 2023 to 2024, other sectors have struggled. Notable areas that did grow – employment services, medical, computer systems, individual and family services, and management, scientific, and technical consulting services.
A recent report from JumpCloud reveals that small and medium-sized enterprises increasingly rely on managed service providers, or MSPs, as trusted advisors in navigating a complex technology landscape. The Q1 2025 SME IT Trends Report indicates that over ninety-three percent of organizations surveyed either currently use or are considering using an MSP. Notably, thirty-five percent now have an MSP completely managing their IT programs, a rise from twenty-nine percent six months prior. The report highlights that IT teams face challenges such as rising costs and security threats, leading them to seek proactive management from MSPs. Additionally, forty-three percent of U.S. organizations utilize MSPs for full IT management compared to thirty-one percent in both the U.K. and Australia. As MSP partnerships grow, a significant seventy-six percent of SMEs plan to increase their investments in MSPs over the next year.
Why do we care?
These reports collectively point to a resilient but shifting economic landscape—one where large enterprises continue to dominate, small businesses are struggling to keep pace, and MSPs are emerging as crucial partners for SMEs trying to stay competitive.
I want to dwell here on the small business data.
The continued dominance of large enterprises presents a challenge for smaller firms. The Washington Post’s findings show that over half of American workers are now employed by companies with 500+ employees, and businesses with fewer than 100 employees are losing ground. This means:
- Small businesses face structural disadvantages in scale, capital access, and procurement.
- Large firms keep consolidating market power, making it harder for smaller players to grow.
- SMBs increasingly need specialized help, particularly in technology, to stay competitive.
Small businesses are losing ground. There’s absolutely opportunity here. That said, I want to highlight that a well entrenched idea that the American economy is driven by small business may increasingly be less true.