Entrepreneurship Is an Economic Bright Spot

Chris EdwardsRecent economic news has been mixed with supply chain bottlenecks and high inflation on the one hand, but solid growth on the other. Another bright spot is entrepreneurship. Since the summer of 2020, the number of U.S. business startups appears to have soared.The chart below shows Census Bureaudata for the number of actual and estimated business formations or startups. Business formations plunged at the start of the pandemic, but then reversed course and have risen to levels not seen in more than a  decade. As the chart shows, the recession a decade ago hammered entrepreneurship and appeared to have permanently downsized startup activity. So the recent data is surprising good news.The chart data is for employer businesses, meaning firms that hire at least one worker other than the owner. It is based on the first instance of payroll tax liabilities. The Census also tabulates business applications based on requests for employer identification numbers (EINs), and then uses that data to project future business formations, as discussedhere.On the chart, the number of startups is estimated to have jumped 21 percent between December 2019 and December 2021. Regional data show that the jump was 29 percent in theSouth, 20 percent in theMidwest, 16 percent in theNortheast, and 15 percent in theWest.Why has the number of startups risen? One factor is hardship. People laid ‐​off during downturns may turn to entrepreneurship to earn income. Also, when downturns cause som...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs