Despite fears about the instability of the American economy, a recent report from the Economic Innovation Group (EIG) states that almost 75% of U.S. counties have seen a net gain of new small businesses since the beginning of the COVID-19 pandemic.
Physical business establishments are up 7% from pre-pandemic levels, and as of September 2021, many counties have more brick-and-mortar stores than before the pandemic. The American South saw the most significant growth at 9%, with small and mid-sized counties leading the pack. Idaho’s Ada County, home to the capital, Boise, experienced a remarkable 23% growth in physical businesses. The county that lost the most small businesses was New York County (Manhattan).
EIG, a bipartisan think tank, analyzed data from the Bureau of Labor Statistics' quarterly census of employment and wages through quarter three (Q3) 2021. They found that these recovery levels were even more pronounced than after the recession of 2007 and 2008. Five years after the 2008 recession, only 44% of U.S. counties had more physical businesses as opposed to 74% in the post-pandemic era. This recovery has seen the unemployment rate fall to 3.6% as of March 2022, and an additional 431,000 jobs were added to the market that month. And despite rising inflation rates, consumer spending has also been strong, surpassing pre-pandemic levels.
Small business failures have been an omnipresent fear among economists and business owners since March 2020, when the U.S. economy lost 20 million jobs, and many small businesses were forced to close, said EIG Research and Policy Associate Connor O'Brien. But he said that this recent data dispels any notions that the small businesses industry cannot persevere against adversity.
“These fears failed to materialize,” O'Brien told The Hill, “no doubt due in part to unprecedented direct federal aid combined with household and monetary stimulus that enabled an entirely new crop of enterprises to take root.”