More People Started Businesses in September 2022 than Pre-Pandemic

Written by Ricky Nave in Economics

Entrepreneurship (as measured by the number of monthly new business applications) remains significantly higher than it was pre-pandemic.

This surge in entrepreneurship partly explains why the U.S. labor market has remained so tight. Other factors affecting the U.S. labor market include upward demand shock from fiscal stimulus, excess liquidity from monetary stimulus (liquidity that got channeled into VC funds and startups to hire people, amongst other places), and many other factors related to the massive shifts in lifestyle and workstyle that occurred during the past 2 years.

However, entrepreneurship trends varied by industry. Here are some of the most interesting ones.

Retail Industry Entrepreneurship Trends

The surge in retail business entrepreneurship is the most extreme surge in entrepreneurship seen in any industry during the pandemic. From around 30,000 new retail business applications per month, we skyrocketed to nearly 130,000 per month before coming back down to still about twice pre-pandemic levels.

Information Industry Entrepreneurship Trends

The information industry includes many types of online businesses so it is somewhat surprising that this type of business did not experience the same surge in entrepreneurship that retail did during the pandemic.

Real Estate Industry Entrepreneurship Trends

Interestingly, the real estate industry did not really have a pandemic surge in entrepreneurship. It fell off during the first year of the pandemic and then recovered fully during the booming housing market, but it still isn’t notably over the pre-pandemic trend.

Construction Industry Entrepreneurship Trends

Like the real estate industry, the construction industry didn’t have a significant deviation in entrepreneurship from its pre-pandemic trend. In fact, entrepreneurship data in the construction industry doesn’t really show any sign that the pandemic ever happened.

Accommodation and Food Service Entrepreneurship Trends

This chart actually surprised me quite a bit. During the lockdowns in 2020, we heard about lots of restaurants failing and hospitality businesses struggling. However, those hardships on existing businesses are not reflected in the entrepreneurship trends for food service and hospitality businesses. Instead, entrepreneurship seems to have spiked almost immediately after the pandemic began.

Ricky Nave

In college, Ricky studied physics & math, won a prestigious research competition hosted by Oak Ridge National Laboratory, started several small businesses including an energy chewing gum business and a computer repair business, and graduated with a thesis in algebraic topology. After graduating, Ricky attended grad school at Duke University in the mathematics PhD program where he worked on quantum algorithms & non-Euclidean geometry models for flexible proteins. He also worked in cybersecurity at Los Alamos during this time before eventually dropping out of grad school to join a startup working on formal semantic modeling for legal documents. Finally, he left that startup to start his own in the finance & crypto space. Now, he helps entrepreneurs pay less capital gains tax.

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