I still don't understand this:
Business formation dropped a bit at the beginning of the pandemic, but by July 2020 it rebounded and hit a peak nearly twice its pre-pandemic rate. That subsided, but only slightly: from 2021 onward business formation has been running at a steady 50% above its pre-pandemic rate with no sign of a slowdown.
Why? Even more mysterious is the fact that I never see this mentioned anywhere. Nor does it seem to be a mere artifact or change in methodology. New business formation really is up a lot. "High propensity" business formation, which identifies businesses likely to have a payroll, is also up a lot. Businesses with planned wages are also up. And this increase is spread throughout every single industry:
Retail business formation has absolutely skyrocketed. Other big gainers include food services, transportation, and admin.¹
But why?
¹Utilities are also up, but the absolute numbers are tiny.
"... New business formation really is up a lot. .."
What about the death rate? I think covid killed a lot of businesses. Possibly leaving space for new entrants. Like after a forest fire.
This.
I was thinking restaurants. They were decimated by Covid. Lots of churn in that market.
This. Also retail. A lot of properties and storefronts became available in 2020 and 2021, and there are millions out there who dream of running their own bistro or clothing shop.
Only fans is a business. Instagram influencer is a business. YouTube and tiktok content creators are businesses. Aside from a bunch of marijuana stores, there is nothing else really new around here.
So, everything’s booming?
Or, we’re about to hit a major recession?
I can’t keep track …
All those folks shoplifting from CVS, and then selling on Facebook Marketplace count as a business, right?
Side hustles--as mentioned above. And people realize setting up an LLC/s-corp/etc. is not that difficult and can come with advantages.
Tax scams. Working from home, people discovered running all your personal expenses through a “business” has tax advantages.
Relatedly, possible PPP scams too. Having a “business” opens the door to future crisis “loans” that magically turn into grants which never need to be paid back. Always be grifting, and the best time to start a future failed business is before the next crisis.
this is what I logged in to write. just a firehose of fraud out there.
Pandemic forced most people out of old routines, meaning some saw new possibilities. It's like migrations; when you arrive in the new country you do things you never did before.
Baby boom demographic bubble has reached the age of corporate age discrimination. It's not any more complicated than that.
Unlikely. Baby boomers would’ve started facing workplace age discrimination at least 25 years ago. This couldn’t possibly account for a spike in new business creation beginning in 2021.
The pandemic put the economy in a new regime. Out with the old, in with the new. We just had the most massive domestic spending by the federal government since WWII. We're at the start of a new boom.* It's true even if no one realizes it yet. Bidenomics, baby.
* As B. Franklin supposed said, if you can keep it.
Actually, the R's are up in arms over the IRS improving both services (so people can actually get advice in a timely fashion) and ramping up audits of the rich and big corporations, which have dropped quite a bit. Odd thing that - the IRS has been spending a lot of time auditing people with, actually, relatively little money, and carefully avoiding people with lots of wealth AND income.
The IRS would be able to make life a LOT easier for lower income people by being smart about the fact that they already have a lot of the data that would make it possible for a lot of people to NOT have to pay a tax accountant or firm to create a simple tax return. Then start working harder on making sure the whales are on the up-and-up.
I think there were a lot of reasons. COVID was like a snow day or a zombie apocalypse. It was a chance to stop the ordinary routine life and think about what one was doing. The legal term I've heard was "locus poenitentiae", a place to think. All those movies about collapsed civilizations are really just wish fulfillment.
Give everyone a few hundred or even a few thousand dollars as part of the COVID stimulus and you have a nation of lottery winners, A lot of lottery winners go right back to work, but having a few bucks in their pockets for, possibly, the first time ever offers a lot of possibilities. Ages ago, the National Lampoon had a what-if-JFK-had-lived? special issue with the alternate 1960s offering a Federal Spare Change Program. Hey, why not?