The number of new businesses in Oregon has jumped more than 30% compared to pre-pandemic levels, according to the latest federal data. State economists believe this is a sign of a revival in the state's economy.
“The long-term driver of innovation is new business,” Josh Lehner of the Oregon Bureau of Economic Analysis told state lawmakers last week.
Oregonians will launch 14,000 businesses in 2022, up from an average of 10,600 businesses per year from 2017 to 2019. Lehner said this is a sign of hope that could offset the economic headwinds created by slower population growth.
Lehner told lawmakers that new businesses are more innovative, agile and less prone to bureaucratic inertia. And the more new businesses emerge, he said, the more likely some of them will grow into major employers and economic powerhouses.
“There are more ping pong balls in the hopper,” Lehner said.
The number of companies filing for bankruptcy is at an all-time low, but the number of companies surviving their first year has recently declined, not only in Oregon but across the nation. However, the growth in new businesses far exceeds the increase in business failures, leading to a net increase in successful new businesses.
Entrepreneurs tend to be in their 30s and 40s, so it's no surprise that new business formations are on the rise as the relatively large millennial generation ages and enters this category, Lehner said. Ta.
Growth in new business has come despite a significant decline in venture capital, which has halved in each of the past two years. Venture capital is an outside investment that ambitious entrepreneurs use to quickly transform a startup into a large company.
But Lehner noted that most people who start new businesses don't have very lofty goals and instead fund their ideas with personal savings or credit card debt. Rising incomes and home prices have made it possible for many budding small business owners to fund their ideas.
And Lehner said they are laying the foundation for Oregon's future.
“We look forward to seeing these startups drive economic innovation for years to come,” he said.
This is Oregon Insight, The Oregonian's weekly analysis of the numbers behind the state's economy. Check out past publications here.
— Mike Rogoway | firstname.lastname@example.org |
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