Further to my last post on the Gallup numbers, this Economix read-out of a new Cleveland Fed study is alarming: it shows that entrepreneurship is also on shaky footing, and that this is having a direct impact on job creation.
The primary reason for the precipitous drop in the number of businesses in the chart below was not just business failure; the downward slope is driven primarly by a lack of new firm formation.
This is a problem because new businesses are typically a key driver of job growth in America.
The post at Economix quotes the report author, Scott Shane (whom we interviewed in February here):
68,490 more businesses closed in 2009 than in 2007, an 11.6 percent increase in the business closure rate. But in 2009, 115,795 fewer employer businesses were founded than in 2007, a 17.3 percent decline in firm formation
Once again, lowering the tax rate on businesses would help. Health care reform, and not just repeal (though that's a necessary first step), and regulatory relief are urgent priorities right now.
The Fed paper is here.