Allied Framing Products sells moldings, matting and glue on Union Street in Warren. Or it did until July, when the 44-year-old shop shut down.

Last month, The Colibri Group, the East Providence maker of $100 cigarette lighters, went up in smoke, its gold and silver supplies put up for sale to pay millions of dollars in debts.

Boat World, opened in Warwick in 1989, is next. Its 35 employees have been laid off and a bright 15-foot banner on its fence pleads, “Where is our bailout?”

In Rhode Island these days, Yellow Pages listings go quickly out of date.

The recession that has smothered stocks, crippled the real estate market and upended the nation’s banking system is taking a painful toll on Ocean State businesses.

For months, economists have measured the depth of the state’s recession in rising unemployment, which hit 10 percent in December, the highest level in three decades. Collapsing housing values and foreclosures have also raised alarms.

But the bible-length list of boarded-up storefronts is arguably more alarming. Vanishing companies increase unemployment, reduce corporate spending that supports suppliers and vendors, and deprive government of desperately needed tax revenue in a state struggling to erase a $357-million budget deficit.

Perhaps more worryingly, the exodus jeopardizes the state’s prospects for a quick recovery when economic activity elsewhere in the country finally picks up. Starting a new business requires financing, planning and building that delay job creation.

“The longer the recession lasts, the more businesses go under and the longer the recovery will take afterwards,” Andres Carbacho-Burgos, an economist for Moody’s Economy.com, said. “The recovery will be slower and more tentative.”

There is little current data on the number of companies operating in the United States, making regional comparisons difficult. But in Rhode Island, state and local statistics reveal an expanding catalogue of broken businesses.

Last year, 7,071 businesses did not submit the required annual report to the secretary of state, 11 percent of the 66,352 businesses and nonprofit groups registered to operate in Rhode Island in February 2008, according to a state review completed for the first time at the request of The Providence Journal.

The failure to file a report does not necessarily signal that a business shut down. Even in good times, businesses come and go, a process known as churn that punishes bad ideas and frees up space for new firms. Profitable businesses sometimes skip town or simply neglect to file an annual report, despite a $25 penalty and the risk of losing corporate status and its legal protections.

But the bleeding of businesses last year was historic. In all, the number of corporations that disappeared swelled by 23 percent, by far the highest single-year jump in the past eight years. (Limited partnerships and limited liability partnerships, such as a lawyer or an accountant with no employees, do not register with the secretary of state.)

“It’s obvious that with all that is going on, we’re witnessing a significant readjustment period,” Secretary of State A. Ralph Mollis said in an interview. “These are numbers that require the state’s attention.”

All the going-out-of-business going on is even more worrisome given the slowdown in new business creation.

Many of the same pressures haunting companies –– including slumping consumer spending and scarce credit –– have paralyzed would-be entrepreneurs. The number of new corporations opening in the state fell by 9 percent last year, only the second decline in the last decade.

In all, slightly more businesses were added than lost last year. But given the remarkably low survival rate for start-ups, state leaders hope to see a wide gap between those two numbers. In 2002, the number of new business registrations jumped 15 percent, and it grew by a further 10 percent the following year.

“When small businesses are running for the hills, it’s bad news,” said Timothy Howes, a business professor at Johnson & Wales University. “Job growth historically comes from small and emerging companies.”

In Vermont, where unemployment hit 6.4 percent in December, the number of new businesses forming fell by 9 percent last year and the number of corporate dissolutions rose to 941 from 867, an 8-percent increase.

In Maine, which has New England’s third-highest unemployment rate after Rhode Island and Connecticut, the number of businesses that melted away last year — 5,314 — was 8 percent higher than in 2007.

In Rhode Island, there are many signs of distress. At the discount Patriot Cinemas in East Providence, the weekly $1 shows are advertised as “Economic Recovery Tuesdays.” At Fatty McGee’s, a pub in downtown Providence, the sales pitch strikes a similar note: “Hard times? Easy prices.”

Merchants have been beating a path to the U.S. Bankruptcy Court. Last year, the court processed 142 filings involving business debts, up from 48 in 2006 and far above the annual average of 81 since 2000.

With little demand for manufacturing or retail space, the value of commercial and industrial property in Cranston, the state’s third-largest city, dropped last year to $1.37 billion from $1.47 billion, a 7 percent decline, according to the city’s tax assessor, Salvatore Saccoccio.

In Warwick, the state’s second-largest city, the Building Department issued only four permits for commercial construction from last July 1 to the end of January, authorizing a total of only $6 million in investments. In the same period a year earlier, the city approved double the number of permits for twice the amount of spending.

“Over the weekend, I went to cut a ribbon at a Papa Gino’s,” Warwick Mayor Scott Avedisian said. “That’s how bad it’s gotten.”

Fewer existing businesses added to their floor space in that period, from 228 expansion projects a year ago for $21 million in spending, to 200 for only $6 million. “It’s the result of this banking crisis. It’s very difficult for people to find money,” Fred Farno, director of the city’s Building Department, said. “You can see the wariness in the numbers. It’s a tough moment for everyone.”

Janine L. Burke, who runs a regional sewage plant in neighboring West Warwick, has seen a slowdown in construction lead to a “major drought in new permits,” at the same time that current customers are “packing up and leaving.”

Secretary of State Mollis has not identified trends among the businesses that have failed to renew. The annual reports filed with his office include little information beyond the address and directors of a corporation. So a drop in updated filings offers few clues to what size businesses and what sectors of the economy are suffering most.

But small businesses, particularly in long-troubled industries such as manufacturing, are always vulnerable to a downturn. With little cash in reserve, a sudden tightening of credit may cause cash-flow challenges that sink even a profitable enterprise.

The stumbles of corporate titans such as Bank of America and Fidelity Investments have received a great deal of attention. But in all, businesses with fewer than 500 employees account for 97 percent of the state’s employers and 57 percent of private-sector jobs, according to the U.S. Small Business Administration.

In Rhode Island, the local entrepreneurs who built companies such as GTECH and American Power Conversion have generated some of the most significant job creation in a generation.

“The way out of this mess is innovation, and most innovation comes out of small businesses,” Alan G. Hassenfeld, the former chief executive officer of Pawtucket-based Hasbro, the global toymaker, said in an interview.

Jasmine and Ivy, a flower and gift basket shop in South Kingstown, opened in owner Jennifer Scott’s home in 2003 and now operates a manufacturing facility and a retail Web site, jasmineandivy.com, that employ four people.

With plans to decorate tables for weddings and other functions, Scott hopes to open additional locations and hire full-time managers. “We have a great deal of potential to grow,” she said.

These days, however, most businesses here are simply trying to endure.

Lauren E.I. Slocum, president of the Central Rhode Island Chamber of Commerce, says she has watched a parade of small businesses close up shop during this recession, including companies that had paid membership dues since the 1980s.

Proud independent contractors, Slocum said, are now dependent on hourly wages at Home Depot and other chain retailers. Computer technicians, caterers and house cleaners have also slipped from employer to employee. “It’s a pretty scary time,” she said.

To stave off additional closures, the chamber has begun advising business owners about the possibility of cutting staff hours, avoiding layoffs and giving employees access to a state unemployment fund for part-time workers.

At Stanley Steemer in Warwick, requests for carpet cleaning dropped by half last year, draining the commissions earned by the company’s 16 carpet cleaners. “It was a pretty rough year for them,” assistant manager Jesse Almeida said. “A lot of them had to pick up part-time jobs to get by.”

With support from its corporate headquarters in Ohio, the carpet cleaning branch has no plans to close. But the majority of small businesses are family-owned, and they are on their own.

Wendy A. D’Antonio, owner of the Home Again Consignment Shop, in Warwick, cut her staff from 10 employees to 4 as she watched sales drop by half. Bargain-hunting shoppers are helping keep traffic steady, but instead of ordering delivery of dining room sets and armoires, customers are carrying away lamps, pitchers and serving platters.

The shop’s lay-away option is popular. So is haggling. “Before, I put a tag on and people paid,” D’Antonio said. “Now there is a lot more negotiating.”

The federal stimulus plan is designed, in part, to boost consumer spending before more businesses buckle. At the same time, Governor Carcieri is pushing his own stimulus package to prop up small businesses in Rhode Island by making more loans available.

Some economists, meanwhile, say there is reason to believe many businesses could be reborn as swiftly as they toppled.

“You’re going to get new businesses forming,” Robert Tannenwald, vice president at the Federal Reserve Bank of Boston, said in an interview. “Capital is a lot more mobile than it used to be. Entrepreneurship is at a much greater level than it was 20, 30 or 40 years ago.”

Whether that happens in Rhode Island, which hurtled into recession before most of the nation, is not clear.

For now, Vincent J. Gasparro, whose Allied Framing Products, opened in 1964 and survived competition from pre-made picture frames sold at Wal-Mart and Staples before it was felled by the recession, has suddenly found himself in retirement.

“I enjoyed what I was doing. If it was profitable, I’d still be there,” Gasparro, 74, said. “But the customers stopped buying. Everyone is going out of business.”

bgedan@projo.com