The number of new businesses in the US is collapsing — and that’s disastrous news for the economy
Bob Bryan
BusinessInsider.com
9/16/2016
Possibly the defining business trend coming out of the financial crisis has been a “start-up boom.” Everyone is building an app or starting their own business it seems.
This image, however, may be just an illusion according to Michelle Meyer, US economist at Bank of America Merrill Lynch.
Both the formation of firms (for example, McDonald’s as a whole) and establishments (an individual McDonald’s restaurant), have dropped off precipitously since the financial crisis and have remained low.
This is important, according to Meyer, because new businesses typically hire faster and produce higher levels of productivity than firms that have been around for awhile. Thus, the decline in business formation can explain some of the labor market’s post-recession problems, and is at least part of the reason for the steep drop in productivity.
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