New Business Applications Jump Higher in November

By SBE Council at 13 December, 2024, 5:13 pm

by Raymond J. Keating -

Welcome news on the entrepreneurship front came from the U.S. Census Bureau's latest "Business Formation Statistics" report for November 2024.

New business applications (seasonally adjusted) for November registered 448,758, which was up by 5.5 percent compared to October.

High propensity applications (i.e., a subset of business applications "that have a high propensity of turning into businesses with payroll") grew by 7.5 percent.

In terms of definition, the Census Bureau explains that "the business applications for tax IDs as indicated by applications for an Employer Identification Number (EIN) through filings of the IRS Form SS-4." So, these are not actual businesses yet. Some applications will become businesses, while others will not be launched.

Since mid-2023, the general trend on new business applications has been a slow decline. At the same time, however, applications have remained well above pre-pandemic levels.

Source: Federal Reserve Bank of St. Louis, FRED

The U.S. needs a boost in entrepreneurship, so this recent months' increase, along with the higher post-pandemic levels, have been most welcome.

As for turning applications into actual businesses, on the policy front, elected officials at the federal, state and local levels should have the following question foremost in their minds: How can we reduce the costs, lower the barriers, and enhance incentives for starting up, building, operating and investing in businesses?

As is always the case with growing an economy, it means expanding freedom and opportunity so that entrepreneurs and their employees can build and innovate, and so that investors can fund entrepreneurial ventures.

For example, reducing tax and regulatory burdens and expanding access to markets are vital to an ecosystem that encourages startup activity while improving the chance for success.

In the end, expanding economic freedom and is the best economic policy.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist , The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist .

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