For over 30 years, Gary D. Halbert has been publishing newsletters for the investment community. Now you can receive his FREE Forecasts & Trends E-Letter delivered each week to your e-mail inbox. Gary covers the latest economic forecasts and market analysis, and you'll enjoy his always-spirited political commentaries.

This Week's Forecasts & Trends E-Letter

Business Startups Flock To Just 20 US Counties - Here’s Why

June 28, 2016

Most of you reading this are aware that new business startups have fallen below business closures since 2008. Since records have been kept, new business startups outnumbered business closures each year, often by wide margins. But not so since the Great Recession.

A new study released in late May by the non-partisan Economic Innovation Group (EIG) found that fewer new businesses have been started in the last five years than at any time in the last 30 years. This fact is just more proof that this is the weakest economic recovery in post-war history.

New business startups outnumbered business failures by about 100,000 annually from 2000 to 2008. Yet according to the new EIG study based on the latest Census Bureau data, business failures have outnumbered startups by around 70,000 a year since 2008.

And the news from the latest EIG study gets even worse. The new businesses that did start up during 2010-2014 were concentrated mainly in large metro areas on the East and West Coasts and in Texas, as opposed to in rural America. In fact, half of all new business startups were concentrated in just 20 large counties across the US.

Let that soak in. According to recent US Census Bureau data, 50% of all new businesses that were started in 2010-2014 were domiciled in just 20 large US counties. The question is why? The answer seems to be that most new startups are high-tech ventures that need higher educated workers, and those workers are increasingly living in our largest cities.

This is a very complicated issue with serious implications for the future of our country, especially rural America. I’ll try to explain as we go along today.

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