El worrying slope of American Business Dynamism

  Tyler Cowen called "great stagnation". Former Treasury Secretary Larry Summers said that the United States has entered a period of "secular stagnation." Whatever the name, most researchers and economists worry that the United States is a country that is economically less innovative than a decade ago. 

A new study by the Brookings Ian Hathaway and Robert Litan issued today provides empirical evidence on the dynamics of the decline of American business in the last decade, and especially since the economic crisis and recovery. It was based on their previous research, which I covered in May, which argued that the United States economy becomes less dynamic in all major industries and in all geographic regions. The new study uses data from the Census Bureau Business Dynamics Statistics data from 1977 to measure the flow of business and employees in all sectors, regions and firm size. 

There are two big takeaways here. First, the level of new firms entering the economy of the United States has dropped substantially over the past two decades. And second, younger firms also fall, driven by a shortage of entrepreneurship. 

The table below, from the study, indicating the level of new firm entry and exit of the economy between 1978 and 2011-a key marker of economic dynamics. The mortality rate that the company has more or less constant, with a slight increase from the Great Recession. However, the speed at which new businesses are being created and entering the economy has shown a slight downward trend over the entire period.

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