The U.S. economy is in a constant state of evolution, but recessions tend to bookend distinct eras of growth and development. The Great Recession was no different. The ongoing expansion continues to take shape, but it so far has been characterized by deep economic anxiety persisting alongside steady headline growth. Getting to the bottom of that paradox motivated this report.
This analysis surveys the economic landscape emerging from the Great Recession and compares it to previous recovery periods. It identifies differences in the strength and geography of countylevel growth in employment and business establishments — two key markers of economic dynamism — and uncovers three significant transformations in the economy. The first and most unambiguously troubling is a collapse in the number of new firms in the economy. The second is the increasing geographic concentration of recovery-era businesses and jobs into a smaller number of more populous counties. The third is the shift in the counties driving the nation’s economic recoveries from smaller to larger ones.
Together, the findings capture an economy veering towards a less broadly dynamic, less entrepreneurial, and more geographically concentrated equilibrium — more reliant than ever on a few high-performing geographies abundant in talent and capital to carry national rates of growth. Even in the relatively short period of time analyzed here, patterns have reversed. Large urban counties dominate where they once lagged, while small counties have nearly disappeared from the map of recovery altogether.
At the national level, a scarcity of new businesses implies a future of reduced economic dynamism. New businesses play a disproportionate role in commercializing innovations, stoking competition, and driving productivity growth. They also create the bulk of the nation’s net new jobs and provide the extra demand that is critical to achieving wage-boosting full employment.Read Study