According to a new study from the Brookings Institution and as reported by a Washington Post blog, new business creation is at its lowest point in the last three decades. Meanwhile, the number of firms dissolving is on the rise. This means that in the U.S. today, businesses are disappearing faster than they are being created.
This may be one reason why the economic recovery over the last several years has been hesitant, and why job growth continues at a sluggish pace. New business creation, as measured by businesses less than one year old, has declined by about half between 1978 and 2011.
This unprecedented shift in the American business landscape could have profound effects on the economy and could lead to more slow growth in the future. The dynamic and entrepreneurial nature of the U.S. economy has certainly been one of its strengths, and something that we need to consider going forward.
To read the Washington Post blog post, please click here.