BUILDING ON THE BIDEN-HARRIS SMALL BUSINESS BOOM
Analysis from the Council of Economic Advisors shows that this rise in business applications is consistent with several other indicators that point to a persistent and accelerated pace of business formation, entrepreneurship, and economic activity. Since the start of the Biden-Harris Administration, the average monthly flow of high propensity business applications has been at historically high levels. This represents a roughly 35 percent increase relative to the average monthly flow of applications between 2004, when the series began, and January 2021. This growth coincides with a high annual pace of private-industry establishment growth, indicating that that these trends cannot be simply explained by typical business-cycle patterns. And, it’s consistent with business applications serving as a leading indicator of business formation, and confirms that the recent surge in business applications coincided with strong business formation. Looking at just a subset of new business applications—those that indicate plans to hire employees— there is a strong positive relationship between the number of business applications with planned wages and total new jobs created between February 2021 and March 2024. This may suggest that a sizable uptick in business applications with planned wages coincides with strong job growth.
Black and Hispanic Business Ownership Has Grown at Fastest Pace in Three Decades This strong period of rise in business growth and job formation has been punctuated by significant growth in minority business ownership. The share of Black households owning a business has doubled and the share of Hispanic individuals has increased by over 40% since before the pandemic, according to the Federal Reserve. This is the fastest pace of growth in business equity ownership for these groups over the past three decades. Recent media reports have discussed rise in minority-business ownership using other measures – all of which are consistent with the trend we observe in the data sources discussed here.