James Pethokoukis

Politics and policy from inside Washington

Recessions and entrepreneurs

June 15, 2009

A great study on recessions and creative destruction from the Kauffman Foundation:

This research study, analyzing data from the U.S. Census, the Fortune 500, and the Inc. list of America’s fastest-growing companies, presents three main findings:

1. Recessions and bear markets, while they bring pain and often lead to short-term declines in business formation, do not appear to have a significantly negative impact on the formation and survival of new businesses.

2. Well-over half of the companies on the 2009 Fortune 500 list, and just under half of the 2008 Inc. list, began during a recession or bear market. We also find that the general pattern of founding years and decades can help tell a story about larger economic trends.

3. Job creation from startups is much less volatile and sensitive to downturns than job creation in the entire economy.

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