Startup creation is surging. A Richmond Fed economist discusses the implications.

The U.S. is seeing a surge in new business formations for the first time since the Great Recession, but economists are unsure if it is a temporary restructuring of the economy or a long-term shift.

Chen Yeh, senior economist at the Federal Reserve Bank of Richmond, recently discussed the topic on an episode of the Fed’s “Speaking of the Economy” podcast. Yeh’s research focuses on the labor market and the role it plays in business decisions. He said the growth in new business formations is based on applications for Employer Identification Numbers with the federal government.

The surge in new businesses started during the pandemic. It is estimated the number of active businesses fell by 3.3 million at the start of the pandemic, or about 22%. Some were temporary closures and others were permanent. But by the summer of 2020, new business creation surged and has remained at pre-pandemic levels.

Businesses had to adjust to the work-from-home economy and the lockdown. The largest number…

Read the full story from the Washington Business Journal.

More from WTOP

Log in to your WTOP account for notifications and alerts customized for you.

Sign up