Surging Startups

There were 5.4 million new business applications in 2021. That’s 23% higher than 2020’s record 4.4 million, and 35% higher than the total in 2019. While pandemic economics haven’t resulted in a garden-variety recession—in either its duration (short) or its recovery (K-shaped)—there are factors that have made this period the best time to start a business in a decade.

The combination of historic savings, government stimulus, and record asset appreciation shaped a wave of consumer spending unlike anything we’ve seen since baby boomers first decided consumerism was a virtue. A gestalt grew among consumers and enterprises to question the status quo and be open to new products and services. And innovative fields emerged to disrupt traditional industries, just as viral immunity kicked in for most Americans.

Of course, applications are a forward-looking indicator—they’re only a proxy for actual business creation—and not all of these applications result in a full-fledged business. Still, they serve as a marker for optimism.

79

Number of Business Applications

Source: U.S. Census Bureau’s Business Formation Statistics.