Tracking the Robust Recovery in the Business Sector Since 2020

A Hamilton Project analysis of the business sector over the COVID-19 period finds that, despite initial fears of widespread failure, existing businesses and new entrepreneurship have defied earlier expectations, ending 2021 with nearly 450,000 more establishments in operation than prior to the pandemic.

Underneath these aggregate results, patterns across industries reveal evidence of considerable economic restructuring. A large share of new business creation has occurred in the industries most exposed to the pandemic downturn, primarily face-to-face services like restaurants. Other new business activity, such as online retail and data services, reflect new opportunities in the transition to a more remote environment. This report also traces the employment implications of this churn to uncover the impacts of initial employment losses and recent recovery across businesses of varying sizes. While questions remain around the contribution of these new dynamics to job creation and productivity, the persistence of these shifts and the resiliency of small businesses will play key roles in determining the path of the recovery moving forward.