Finance

Nearly three-quarters of US counties have more businesses than before pandemic: analysis

AP-Ringo H.W. Chiu

Close to three-quarters of U.S. counties have seen a net gain of businesses since the start of the coronavirus pandemic, according to an analysis of federal data released Tuesday.

By the end of September, 74 percent of U.S. countries had more physical business establishments than they did before the start of the COVID-19 pandemic and recession in March 2020, according to researchers at the Economic Innovation Group (EIG), a bipartisan think tank. Only 44 percent reached that level five years after the end of the 2007-08 recession and financial crisis. 

EIG analyzed the latest data from the Bureau of Labor Statistics’ quarterly census of employment and wages up through the third quarter of 2021. The think tank found signs of a much stronger economic rebound, with fewer permanent business closures, than many economists expected at the onset of the crisis.

“During the early months of the COVID-19 pandemic, fears of a massive wave of small business failures were pervasive. Fortunately, these fears failed to materialize, no doubt due in part to unprecedented direct federal aid to help businesses survive the downturn, combined with household and monetary stimulus that enabled an entirely new crop of enterprises to take root,” wrote EIG research and policy associate Connor O’Brien.

The emergence of the COVID-19 pandemic caused the quickest and steepest economic decline in modern U.S. history. The U.S. economy lost more than 20 million jobs as thousands of businesses were forced to close or drastically limit their operations. 

Economists feared many of those businesses — particularly in the leisure, hospitality, retail and entertainment industries — would never reopen after months of government restrictions and years of customer health concerns. Even so, the total of physical business establishments was up 7 percent from pre-pandemic levels by the end of last summer, according to EIG.

The South saw the biggest jump in new business establishments since the start of the pandemic at 9.4 percent, followed by the west at 7.3 percent. EIG said small and mid-sized counties throughout the South and noncoastal West were the biggest gainers, led by Ada County — the home of Boise — with a whopping 23 percent gain. Los Angeles, Maricopa, Miami-Dade and Orange counties added the most establishment total since 2020.

The Northeast (6.3 percent) and Midwest (5.2 percent) did not add as many businesses from pre-pandemic levels as their Southern and Western counterparts, with major metro areas in the regions among the slowest to rebound. New York County, which includes Manhattan, lost more businesses than any other county in the U.S.

While the U.S. economy is much stronger than it was when President Biden took office, the president and fellow Democrats have received little political benefit. Voters views on the strength of the economy and Biden’s handling of it have fallen steadily since the second half of last year as rising inflation overshadows an otherwise booming economy.

The U.S. added 431,000 jobs in March as the unemployment rate dropped to 3.6 percent and more workers reentered the labor force. Consumer spending has also held strong and is well above pre-pandemic trends, despite a 7.9 percent annual increase in consumer prices.

But steadily rising inflation, driven in part by pandemic-related supply constraints, has strained household budgets. While the burst of inflation began in automobiles and electronics, prices for food, energy and housing have risen steadily over the past six months.

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