There are almost 60% more new businesses being created each year in the US. Prior to COVID, with its forced closures and slowdowns of businesses, the rate of new business start-ups was declining and considered quite dismal.

It was “quite gloomy,” said Economist John Haltiwanger, an expert on new business growth. New businesses tend to be a sign of job creation, innovation and productivity growth. Researchers said that they were “gobsmacked” to see the trend reverse with the pandemic. The report was in Planet Money.

“Many people lost their jobs. Maybe a lot of them were creating new businesses in a desperate attempt to pay the bills. or just out of boredom,” he said. The real surprise has been that the boom has continued. Four years since it began — “and there’s still a bonanza of new business creation in the United States.” Remote working, suburban growth, tech startups seem to be driving the growth. “Productivity growth means we can make more stuff in less time, which causes products and services to be more abundant and cheaper.”

“I’d say we’re on a new plateau that started in 2021,” Haltiwanger said. Comparing the three years before the onset of the pandemic with the three years after it, the data suggests there are now, on average, almost 60% more new businesses being created each year.

The boom is real. It’s sustained. It’s visible in both businesses that are just a single person striking out on their own and, importantly, businesses that are likely to grow and employ people. It’s seen in traditionally underrepresented minority communities. And, Haltiwanger says, this boom could be a sign that something fantastic is about to happen to the American economy: a long-awaited boost in productivity growth, which is the magic sauce for making society richer.

Two big buckets of new businesses are being created.

New businesses in the first bucket are capitalizing on a huge post-pandemic population shift. Many office workers are now either fully remote or hybrid. “People are not spending five days a week at the office in major downtown areas,” Haltiwanger says. Where people spend their time, they spend their money. Bad news for businesses in downtown areas. Good news for businesses where office workers live.

That’s why one of the big areas for new business growth is in food and accommodations, particularly in the outskirts of cities.

The other big bucket of new businesses are tech startups, according to Haltiwanger. It s the most persistent. “I think we’re in a new tech wave,” Haltiwanger says.

The last time the United States saw a significant uptick in productivity growth was in the 1990s during the dot-com boom. Productivity growth means we can make more stuff in less time, which causes products and services to be more abundant and cheaper. It’s like fairy dust being sprinkled on the economy, lifting society’s standard of living.