New business formation in America goes bezonkers

AS THE PANDEMIC unfolded, the usual economic statistics produced the expected dire results. During the stretch in 2020 from February to May, 20m jobs were lost. Businesses were wiped out at a faster rate than during the financial crisis a decade earlier. Grim news was everywhere.

Buried in the deluge, however, was a bit of light, detailed at length in a working paper from the National Bureau of Economic Research published in June by John Haltiwanger, of the University of Maryland, using a Census Bureau data series that he had helped develop. It was distilled from the first step typically taken by an entrepreneur in the creation of a business, an application for an employer-identification number required by America’s tax authorities, the Internal Revenue Service. The applications provide an unusually rapid read on what was unfolding in the economy.

In contrast to the financial crisis, when new-business formation sputtered and then remained depressed,…

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