Economists are blaming the nation’s tame economic expansion on a continued slump in the creation of U.S. startups, The New York Times reports.
A total of 414,000 businesses were formed in 2015, the latest year surveyed, according to the Census Bureau data. It was a slight increase from the previous year, but well below the 558,000 companies founded in 2006, the year prior to the recession.
“We’re still in a startup funk,” says Robert Litan, an economist and antitrust lawyer who has studied the issue. “Obviously the recession had a lot to do with it, but then you’re left with the conundrum: Why hasn’t there been any recovery?”
The answer could lie in the rising power of the biggest corporations, economists say. They argue that large corporations are stifling entrepreneurship by making it easier for incumbent businesses to swat away challengers or swallow them before they become a serious threat.
The startup slump has far-reaching implications.
Small businesses in general are often cited as an exemplar of economic dynamism. But it is startups—and particularly the small subset of companies that grow quickly—that are key drivers of job creation and innovation.
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