At a moment of intense uncertainty, Americans are rushing to form new businesses — one positive sign for the economic recovery.
What’s happening: Applications to start businesses in the United States are at their highest level in more than a decade, according to data from the US Census Bureau. For the week ending October 3, the most recent data available, requests jumped nearly 40% from the same week one year ago.
This trend is very encouraging, according to Joseph Brusuelas, chief economist as RSM US. After a deep recession, you want a chunk of displaced workers to feel confident they can take advantage of pro-business conditions like low interest rates and strike out on their own, he said.
“This has been one of the primary catalysts of resilience of the US economy throughout its history,” Brusuelas told me.
New business applications did not noticeably increase after the recession that followed the 2008 financial crisis. Brusuelas said that was one signal that the recovery wasn’t going as planned, and that damage from people losing homes, cars and equity ran deep.
This time around, the crisis is hitting renters more than homeowners, he pointed out. That’s still troubling, but means that many Americans have held on to a key source of wealth, and may be more willing to take financial risks.
“One of the mistakes we made in the last crisis is we didn’t create the conditions for people to move toward the formation of businesses,” Brusuelas said.
Also helping: The work-from-home era is opening up new business opportunities and providing flexibility for would-be business owners. The ability to borrow cheaply is a boon, too.
In a recent research note, Goldman Sachs observed that some of the surge may be attributable to a backlog in applications from the