Americans are passing the time spent indoors and under lockdown orders by starting new businesses, leading many experts to believe this is a positive sign for economic recovery.
On Oct. 3, the U.S. Census Bureau reported that over 90,000 Americans had filed applications to start new businesses, a 40 percent jump from the past year, and the highest level in the past decade.
Madison Schneider started a bakery after her plan to work as a worship leader was placed on hold as lockdown orders were issued. An opportunity to lease a commercial space for $350 per month spurred her to use $8,000 in personal savings and a loan from her parents to open a bakery.
Schnieder described the experience to the Wall Street Journal, saying, “It all happened very quickly and was really crazy.”
OkZoomer, a Gen-Z focused dating platform, was created by two Yale students in March with hopes of matching quarantined college students together in their hometowns with possibly limited dating pools.
“OKZoomer started overnight as a meme, like ‘Missed your last chance to shoot your shot? We’ll help you with our dating algorithm,’” said co-founder Ilena Valdez, to the Wall Street Journal. “It blew up.”
Making masks has become both a hobby and prosperous side hustle for many working from home.
However, the Wall Street Journal notes that the application increase can be connected to small businesses forced to close their doors attempting to reopen to a steady boost in personal savings rates and continued spending across states that have reopened.
New filings for business owners employing other workers reached 1.1 million by the middle of September, a roughly 12 percent increase over the same period last year and the highest since 2007, according to data.
John Haltiwanger, an economist at the University of Maryland, explained to the Wall Street Journal that the current pandemic is “actually inducing a surge in employer business startups that takes us back to the days before the decline in the Great Recession.”
Economist Joseph Brusuelas believes this is a positive sign, especially as this was not seen after the 2008 recession.
“This has been one of the primary catalysts of resilience of the U.S. economy throughout its history,” said Brusuelas to CNN. “One of the mistakes we made in the last crisis is we didn’t create the conditions for people to move toward the formation of businesses.”
Investment firm Goldman Sachs noted that part of the surge could be related to backlogs in the application process, and said, “data suggest a much more positive outlook for new business formation than after the last recession.”
The U.S. economy added 667,000 jobs in September, according to the Bureau of Labor Statistics. The unemployment rate remains at roughly eight percent.
Congressional leaders and the White House continue to negotiate the details of a second coronavirus relief package.
Although President Donald Trump announced on Oct. 3 that he would end all stimulus negotiations until after the election in November, both parties and the White House are continuing talks, emphasizing relief for the airline industry and stimulus checks.