Lockhart: Recovery isn’t likely to come from small businesses

The nation’s recovery from recession will be slow and marked with high unemployment rates, Federal Reserve officials said Tuesday.

The presidents of the regional federal banks in San Francisco and Atlanta warned that jobs won’t likely rebound for several years, and said small businesses probably won’t play the stimulus role they have in the past.

Dennis Lockhart, president of the Federal Reserve Bank in Atlanta, said a “very slow net job gains” may occur “sometime next year,” according to the Associated Press.

The AP reports: Small businesses — which held up reasonably well in the 2001 recession — have been clobbered by the downturn, accounting for about 45 percent of net job losses through the end of 2008. During the last two economic recoveries, small businesses contributed about one-third of net job growth. Lockhart said he doubted that would be the case this time.

Many small businesses rely on community banks for credit, such as Everett’s Frontier and Cascade banks. But those types of banks are drowning in commercial real estate loans — an area largely in default — meaning credit is hard to come by.

Lockhart said he is “particularly concerned” about that linkage, according to the AP.