Small Business and Entrepreneurship Thriving in the Post-COVID Era

Eric Van Nostrand, Assistant Secretary for Economic Policy (P.D.O.), is at the forefront of understanding and analyzing the impact of small businesses and entrepreneurs on the U.S. economy in the post-COVID economic expansion. Small businesses have always played a critical role in the economy, but their significance has grown even more in recent times. With entrepreneurship surging since the pandemic, small businesses are creating over 70 percent of net new jobs since 2019, a significant increase from the previous business cycle.

Small business optimism is on the rise as inflation concerns have eased, with more than 70 percent of small business leaders expecting revenues to grow over the next year. This optimism is reflected in various surveys, such as the National Federation of Independent Business (NFIB) Small Business Optimism Index and the U.S. Chamber of Commerce’s Small Business Index, both showing substantial increases in recent months.

Entrepreneurship continues to surge in the United States, with an average of 430,000 new business applications per month in 2024, a 50 percent increase from 2019. This surge in business applications is not just a rebound from the pandemic but a real impulse driven by factors such as remote work, increased household wealth, and a shift in cultural attitudes towards risk-taking.

One encouraging aspect of the entrepreneurship surge is the increasing diversity of self-employed workers. Women now make up 43 percent of self-employed Americans, the highest percentage ever recorded. Additionally, the Black, Asian, and Hispanic shares of self-employed Americans are near all-time highs, reflecting a more inclusive and diverse landscape of entrepreneurship in the country.

Despite the positive trends, challenges remain for small businesses, including tight credit conditions and high costs. However, recent improvements in small business optimism and the surge in entrepreneurship indicate a promising economic outlook. The Biden-Harris Administration is committed to supporting small businesses through initiatives such as the Inflation Reduction Act, CHIPS and Science Act, and the Bipartisan Infrastructure Law, which aim to channel public capital and encourage private investment in economically disadvantaged communities.

In conclusion, small businesses are playing an increasingly vital role in the U.S. economy, and the recent surge in entrepreneurship and diversity among self-employed workers is a positive sign for economic growth and inclusivity. With the right support and policies in place, small businesses will continue to drive innovation, job creation, and economic prosperity in the post-COVID era.