Some apparent good news regarding America’s entrepreneurial dynamism — and the health of the US economy. The Kauffman Foundation’s Index of Entrepreneurship — which incorporate factors such as the monthly share of adults starting a business and the share of new entrepreneurs driven by “opportunity” versus “necessity” — has reversed a multi-year downward trend. From a new report:
Reversing a downward cycle that began in 2010, U.S. startup activity ascended last year, according to the 2015 Kauffman Index: Startup Activity. National business creation findings were released today, and state and metropolitan data will be released June 4. Over the past two decades, the Startup Activity Index generally has risen or fallen in tandem with the business cycle – up in the 1990s expansionary period and plummeting as the Great Recession took hold. The entrepreneurial activity increase in the 2015 Index represents the largest year-over-year increase in the last two decades, giving rise to hope for a revival of entrepreneurship; however, the return remains tepid and well below historical trends.
In the 2015 Index, 310 out of 100,000 adults, or 0.31 percent, started new businesses each month, on average. In the 2014 Index, the average was 0.28 percent of the adult population. “This rebound in entrepreneurial activity lines up with the strength we’ve seen in other economic indicators, and should generate hope for further economic expansion,” said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation. “But, it’s important to view this short-term uptick in context of the bigger picture – we are still in a long-term decline of activity, which affects job creation, innovation and economic growth.”Opportunity entrepreneurs, those who were not unemployed and not looking for a job before they started their new ventures, was 79.6 percent of the total number of new entrepreneurs. This number represented an increase over the 2014 Index, and was substantially higher than in the 2010 Index, when the number of opportunity entrepreneurs was at the lowest rate since the Kauffman Foundation began collecting this data in 1996. “Startup density, or the number of new employer businesses by total population, increased from 128.8, or 128.8 for every 100,000 people, to 130.6 in the Startup Activity calculations from 2014 to 2015. Though startup density is climbing, it remains well below typical historical rates.
Some of my posts on this issue:
The American economic problem that is ‘nothing short of a national emergency’
Which country has the most billionaire entrepreneurs? (And how can we get more?)
Why more entrepreneurship means less self-employment
America suffering from ‘economic calcification’ – JP Morgan
Where are all the startups? More on America’s economic calcification
Crony Capitalism Needs a Kick in the Keister
Fighting the Crony Capitalist Alliance
Is regulation choking small business formation?
Do we want a dynamic, sustainable US economy? Here are 3 key steps to take
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