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Roubini: Why Small Businesses Lag in Recovery

The National Federation of Independent Business's Index of Small Business Optimism rose 0.2 percent in September to 89. But the index remains in a recessionary mode. Small business owners have been particularly hard hit by the recession, and activity in the sector has been weak in 2010, despite GDP showing positive growth in the second half of 2009.

Small businesses play a critical part in job creation. While the government has rolled out tax incentives for hiring and credit incentives for small business loans, these policies have had limited effects. Overall, business owners are pessimistic on growth.

According to Roubini Global Economics, the survey demonstrates the recovery's unevenness. The small business sector is "clearly lagging behind," states a recent Roubini analysis. The survey draws attention to the stubborn U.S. unemployment rate - 9.6 percent in the latest government estimates - and whether unemployment can be attributed to structural or cyclical factors.

To read more of Roubini's analysis, as well as excerpts of reports from the National Federation of Independent Business, Federal Reserve Board, and the Federal Reserve Bank of New York, please visit Roubini Global Economics. Registration is required to view the article.

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