A Slowdown in US Business Formation Poses a Risk to Economy

WASHINGTON (AP) – Despite a decade-plus of economic growth, Americans have slowed the pace at which they’re forming new companies, a trend that risks further widening the gap between the most affluent and everyone else.

The longest expansion on record, which began in mid-2009, has failed to restore entrepreneurship to its pre-recession levels, according to a Census Bureau report based on tax filings.

Between 2007 and the first half of 2019, applications to form businesses that would likely hire workers fell 16%. Though that pace improved somewhat after 2012, it dipped again this year despite President Donald Trump’s assertion that his tax cuts and deregulatory drive would benefit smaller companies and their workers.

Business formation has long been one of the primary ways in which Americans have built wealth.

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