Sputtering Startups Weigh on U.S. Economic Growth (Startups Shrink Since The Great Recession)

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

Unlike the Rolling Stones “Start Me Up,” the US version should be “Slow Me Down.”

According to Jeffrey Sparshott of the Wall Street Journal, the American economy has long relied on fast-growing young companies to fuel job growth and spread the latest innovations. As recently as the 1980s and 1990s, a small number of young firms disproportionately contributed to U.S. employment growth, helping allocate workers and resources to burgeoning segments of the economy.

But government data shows a decades long slowdown in entrepreneurship. The share of private firms less than a year old has dropped from more than 12% during much of the 1980s to only about 8% since 2010. In 2014, the most recent year of data, the startup rate was the second-lowest on record, after 2010, according to Census Bureau figures released last month, so there’s little sign of a postrecession rebound.


Notice that startups have fallen to a new, lower plateau since The Great Recession.

What is the reason for the decline in startups? Could it be the increasing wave of regulations out of Washington DC that is making entrepreneurship choke? Here is The Mercatus Center’s Patrick McLaughlin showing the growth of Federal regulations from 1950 through today.


And are low interest rates are distorting investment to the point that we are seeing fewer and fewer startups?


Fed’s Vice Chair Stanley Fischer asks Fed Chair Janet Yellen, “What’s a start-up?”


Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

Leave a Reply