August 4, 2016
The Annual Kauffman Index Report is in: the Startup Activity Index, a “key annual indicator of new business creation,” has risen to 0.38 for 2016. It has now gone up for two years in a row directly following the year that it bottomed out at its lowest level in two decades.
“The latest Startup Activity Index data show entrepreneurship finally recovering, with new business creation reaching close to the peak preceding the Great Recession drop,” said Arnobio Morelix, senior research analyst at the Kauffman Foundation. “Based on the increasing number of new entrepreneurs – the nation’s job-creation engine – the United States entrepreneurial economy has begun expanding. Recent job creation numbers by the Bureau of Labor Statistics also show this, with 889,000 jobs created by new establishments in the last quarter of 2015 alone – the highest job creation number by new establishments since early 2008.”
Entrepreneurs Are on the Rise
The rate of new entrepreneurs rose more than 15 percent in comparison to two years ago, with approximately 330 out of every 100,000 adults becoming entrepreneurs each month during the latest year.
“The large increase in female entrepreneurs was a major driver in the rising startup activity levels,” said Robert Fairlie, professor at the University of California – Santa Cruz, and an author of the study, in the press release accompanying the news. “Further, more people are pursuing entrepreneurship as an opportunity, rather than out of necessity; this is a big change from the levels of necessity entrepreneurship we saw during and after the Great Recession.”
Though the positive recent trend from the Index is promising, the underlying indicators still point to a long-term decline in startup density when compared to the levels of new business creation in the 80s, 90s and early 2000s. So if you are thinking of starting a business, you better get in on the ground floor now, because it might not last as long as you think.
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