Saturday, January 29, 2022

"Entrepreneurship Is an Economic Bright Spot"

Unfortunately for the sole proprietor or the 2,3,4,5 person employer, they are exactly the class that the powers-that-be hate the most. Because the bootstrapping entrepreneur tends to be a free-thinker and an independent cuss, they are actually a threat to a self-annointed elite that can brook no dissension or questioning of the powers the soi-disant have claimed as their own.

From the Cato blog, January 27:

Recent 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 Bureau data 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 discussed here.

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 the South, 20 percent in the Midwest, 16 percent in the Northeast, and 15 percent in the West.


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 some businesses to close, it creates space for new businesses to fill the void. Many restaurants closed during the pandemic, but that has opened the door for new restaurants to try their luck....