If you’re looking for a signal on whether or not the national economy is on the upswing or struggling in neutral, I say look at the data on people starting businesses. The Wall Street Journal reports that two different studies point to opposite conclusions. That’s troubling, because if people aren’t putting their innovative ideas into start-ups, our economic engine isn’t firing.
First, results from the Global Entrepreneurship Monitor (GEM):
The report also found that new business creation has increased since the recession: Nearly 13% of the respondents in 2013 said they were starting or working on a new business, about the same as in 2012 and 2011, but up from just 8% in 2009 and 2010.
But then there’s this about the GEM data.
The survey findings conflict with a report released in April of this year, showing a decline in new business creation within the U.S.
That study, by the Ewing Marion Kauffman Foundation, a Kansas City, Mo., advocacy group for entrepreneurship, is based on data from the U.S. Census Bureau and the Labor Department, and it found that only about 476,000 new U.S. businesses were started each month in 2013, down 7% from 2012 and 12% from 2011.
Nationally, it’s a toss up as to what’s occurring. One thing we know for sure, however, is that North Carolina’s economy is moving forward, thanks to growth-oriented policies passed over the past three years by the Republican reformers in the General Assembly.
Here are the trends since the passage of UI reform, regulatory reform, tax reform, and the state budget in mid-2013:
• Job creation in North Carolina has exceeded the national average, according to the monthly payroll survey conducted by the Bureau of Labor Statistics. If we had merely matched the national average from June 2013 to May 2014, North Carolina would have created about 13,000 fewer jobs than actually occurred.
• North Carolina has also done better than the nation as a whole in unemployment declines and employment gains, according to the separate BLS household survey. There were 85,000 more North Carolinians were working in May 2014 than in June 2013, while 87,000 fewer North Carolinians were unemployed. If the state had merely matched the national average since mid-2013, there would have been 33,000 fewer employed North Carolinians and 23,000 more jobless North Carolinians looking for work in May.
• North Carolina’s better-than-average performance is not the result of people dropping out of the labor force, as some partisan critics and lazy journalists allege. In fact, North Carolina experienced a smaller decline in its labor force from June 2013 to May 2014 (just 0.04 percent) than the nation as a whole did (0.1 percent).
• Here’s another way to look at it. North Carolina’s employment-population ratio — which takes into consideration both people dropping out of the labor force and the need for job creation to keep up with population growth — rose from 56.8 percent in June 2013 to 57.4 percent in May 2014. During the same period, the nation’s employment-population ratio rose by only two-tenths of a percentage point.
• Beyond the labor market, the most-familiar measure of the economy is gross domestic product (GDP). The federal government produces the national measure on a quarterly basis but releases only annual estimates for states. According to the just-released figures for 2013, North Carolina’s economy grew by 4.2 percent, faster than the national (3.5 percent) and regional (3.2 percent) averages. Adjusting for inflation and population growth, North Carolina’s real per-capita GDP grew by 1.3 percent in 2013, again faster than the national and regional averages.
