Card of the week from DWS. The increase in new businesses since the outbreak of the epidemic will have serious consequences.
Starting your own business is not easy. This is not an everyday occurrence in times of economic crisis. Ten years ago, during the Great Recession that overthrew the Lehman Brothers, various policies in favor of creation and entrepreneurship fell sharply. In contrast, the National Center for Economic Research’s (NBER) latest and most attractive work report has seen a surge in US business creation activity since COVID-19 hit the economy.1.
As our weekly map below shows, the number of self-employed is increasing every year, regardless of whether they are based in a company or not. Creation of more new businesses than one would expect from business closings during an economic downturn. It is not clear why the epidemic once encouraged entrepreneurs in this century, a similar pattern has not been found in other countries.2.
The US government publishes creative statistics
Exceptional frequency of new business.
The availability of data can be partly responsible for this. In the United States, filing a business tax registration application is often automated through online filings, so disruptions to management companies appear to have had little impact on their follow-up. The US government releases new start-ups with an exceptional frequency, providing fertile ground for economists3. It is very difficult to monitor store closures as the response rate from companies that leave the store is inherently high.
Overall, the NBER study shows that the demand for business start-ups has been exceptionally high since the outbreak of the epidemic. There are encouraging signs, including many initiatives that will drive job creation, innovation and productivity growth in the years to come. Christian Sherman, an economist specializing in DWS in the United States, said, “Time will tell if this is true. But it would certainly be advisable to observe the situation. “
Self Employed Development in the United States
Blue: Independent, linked (left axis)
Green: Independent, unbound (right print)