Useful Stats: New Firm Creation by State, 2011

New business creation in the U.S. increased in 2011 for the first time since the 2007-09 economic crisis, according to data released by the U.S. Census Bureau. Census data indicates that 8.2 percent of all businesses were less than one year old in 2011, the first increase since 2006 and the largest increase in a decade. A pair of briefs from the Census Bureau and the Kauffman Foundation link the decline and rebound of American startups to fluctuations in housing prices during the economic downturn. They also suggest that the increase in firm creation has been well-distributed throughout the country.

The Census data reveals that just over 409,000 new firms were less than a year old when the data was collected in 2011. The Business Dynamics Statistics data separates the number of firms from the number of establishments, which represent single locations of businesses. New businesses represented about 8.2 percent of the almost 5 million total U.S. firms that year. In the previous year, new firms were about 7.8 percent of total firms following four years of decline. Though encouraging, the 2011 percentage of new businesses remains well below the 2006 peak of 10.8 percent. Download the Census data...

In conjunction with the release of the business dynamics data, the U.S. Census Bureau worked with the Kauffman Foundation to prepare a pair of briefs explaining the fall and rise of new business starts in the years following the economic crisis. In Anemic Job Creation and Growth in the Aftermath of the Great Recession: Are Home Prices to Blame?, the authors use macroeconomic indicators and the data on business starts to conclude that states with higher housing price declines also experienced greater decreases in business creation. The second report, The Return of Business Creation, validates the resurgence of new business creation and job creation at young firms and suggests the entrepreneurial support programs may have played a crucial role in improving the environment for startups. Read both reports...

SSTI has prepared a table of new firm creation by state in 2011 that sheds some additional light on the geographic dispersion of the recovery. The table also includes information on total number of firms by state, total firms per 1,000 residents, share of total firms launched in the past year and new firms per 1,000 residents. Download the table...

There were 1.31 new firms and 15.98 firms for every 1,000 U.S. residents in 2011. Wyoming, with the lowest population of all the states, led in both total firms per resident and new firms per resident. Low population states, including Montana, North Dakota, Vermont, and the District of Columbia, comprise the rest of the top five states for total firms per resident.  Wyoming, North Dakota and Montana also appear in the top five for new firms per capita, but two high-population states, New York and Florida, also make the top five.

In 2011, Nevada had the highest concentration of new firms in its economy of any state. About 10.9 percent of all Nevada firms were less than a year old that year. Florida placed a close second with 10.6 percent new firms in its economy. Other top states include Utah, Texas and Arizona