Tuesday, April 23, 2013

Entrepreneurship in the Recovery


One interesting side effect of the economic recovery is the impact it has had on business creation. By one key measure, entrepreneurship has actually declined in the past couple of years: In 2012, 0.30 percent of all American adults started their own business, while that number was 0.34 percent in both 2009 and 2010.

The biggest reason for this is probably the dislocation that takes place during a recession. Fewer businesses are hiring, so people with nowhere else to turn are more likely to take a chance on starting their own business. In that sense, the number of people starting businesses can be taken as a contrarian indicator of economic health, or the lack thereof.

Whatever the reason, the rate of entrepreneurship is now back down to where it was prior to the recession. Today’s 0.30 percent figure is exactly the same as it was back in 2007. By that light, it can be said that entrepreneurship in the U.S. is now back to normal.

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