References 1. Golle, Vince, and Kyungjin Yoo. “Economists Place 70% Chance for US Recession in 2023.” Bloomberg, 20 Dec. 2022, https://www.bloomberg. com/news/articles/2022-12-20/economists-place-70-chance-for-us-recession-in-2023. 2. See FOMC Summary of Economic Projections, 14 Dec. 2022, https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20221214.pdf. 3. Haltiwanger, John C., Entrepreneurship During the Covid-19 Pandemic: Evidence from the Business Formation Statistics (June 2021). NBER Working Paper No. w28912, Available at SSRN: https://ssrn.com/abstract=3866345. 4. Ibid. 5. Asturia, Jose, et al., Business Applications as Economic Indicators (May 2021). U.S. Census Bureau Center for Economic Studies Working Paper No. CES 21-09, Available at: https://www.census.gov/library/working-papers/2021/adrm/CES-WP-21-09.html. challenger firms replacing less productive incumbents. A similar pattern plays out in the labor market. A one standard deviation rise in business applications is associated with “substantial and significant increases in hires and separations rates over the next 16 quarters.”4 Another recent study looks at the relationship between business startups and overall economic activity.5 Compared with other leading economic indicators, applications for businesses that are likely employers “are particularly useful as indicators of aggregate economic activity.” The authors note that the economic activity that follows could be a direct consequence of startup activity, or it could be that entrepreneurs are able to anticipate future economic conditions and change their behavior accordingly. If the latter interpretation is correct, another implication is that financial press would be far better served asking new business owners about the outlook for the economy, rather than economists.. “Following a brief dip at the onset of the pandemic, applications saw explosive growth and have since settled at an elevated level. The most notable aspect of the fiscal response to COVID-19 directly related to small businesses, the Paycheck Protection Program, only benefited firms that existed pre-pandemic. In theory, this should discourage startup activity. However, stimulus payments may also have provided entrepreneurs, particularly sole proprietors, with a source of seed capital.” 11 THE NAFCU JOURNAL July–August 2023
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