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New Business Applications During the Pandemic Help Explain Today’s Tight Retail Market
Chart of the Week
July 12, 2024 2 Minute Read
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During the pandemic, economic change and fiscal stimulus like the American Rescue Plan encouraged more Americans to work for themselves. This can be seen in the near 25% increase in new business applications, or requests for an I.R.S. Employer Identification Number, for both 2020 and 2021. Many of these applications were clustered in the accommodation, food service and retail sectors. This surge in consumer-facing businesses has undoubtedly contributed to tight space availability in strip and neighborhood retail centers.
But not all business applicants follow through and some businesses fail. A separate dataset, the Business Dynamics Statistics, is a survey that tracks establishments over time and reported a material uptick in firm failures in 2021 (the latest period for which data is available) likely due to effects surrounding the pandemic and social distancing measures. Looking at the two datasets together suggests there is a considerable amount of churn among firms. Moving forward, these stats are useful signals indicating how the economy is changing.
Figure 1: Business Applications Are Rising While Net Firm Creation Is Decelerating
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Dennis Schoenmaker, Ph.D.
Global Head of Forecasting and Strategic Insight, Head of Data Centre of Excellence
