The Startup Surge

The latest release of Census Bureau’s Business Formation Statistics data shows that nearly 1.4 million applications have been filed to form new businesses likely to hire employees through September of 2021 — the most through the third quarter of any year on record.

The brisk pace means there have been roughly 409,000 more filings in 2021 than at the same point in 2019, or 255,000 more than at this point in 2020.

The lack of strong new business formation in the wake of the Great Recession hindered the country’s economic recovery for years. But this time, after a Covid recession that lasted just two months (the shortest in U.S. history), things are quite different.

Last year, applications to form new businesses — both sole proprietorships and businesses likely to hire and grow — reached unprecedented levels, with likely employer applications totaling around 1.5 million by year’s end, or just over 210,400 more than in all of 2019.

So why is this happening? I believe the pandemic has left some lasting marks on us psychologically. Think of it as a mass epiphany. People en masse started rethinking their lives.

It's why 30 million people have quit their jobs so far this year and 3 million others retired early. And it's the reason why many decided to go into business for themselves. Or have dropped out of the labor force entirely.

I have a hunch that the social and economic changes brought on by the pandemic will continue to shape our choices long after the viral danger recedes. In short, we have changed.

Source Credit: BBA Economic Digest, Dean Barber - Principal