Small Businesses, Innovation, and the Future of the US Economy

The COVID-induced economic shutdowns have undoubtedly caused short-term harm to the economy, but I am not counting the US out just yet. The lasting impact of the shutdowns and the “new normal” are yet to be determined, but we are sure to see scars for years to come. However, I am increasingly optimistic about the future of the US economy. To understand my positive outlook, you have to consider the source of prosperity in our free-market economy: Innovation and the entrepreneurial spirit.

Not even a global economic shutdown can slow the unstoppable optimism and drive of the American entrepreneur. For evidence, we need to look no further than the Census Bureau data on new Employer Identification Number applications (applications for a small business tax ID). As millions of workers around the country were let go due to COVID shutdowns, the IRS saw hundreds of thousands of new business applications. Many of these businesses will fail, and others will remain sole proprietors. Some of these businesses will succeed, create new products and services, expand their workforce, and become leaders in their fields.

Chart that shows US Business Applications with a sharp rise in 2020

Even more encouraging than the hard data are my conversations with small business owners. Over the last several weeks, I have had the joy of speaking to business leaders from around the country. Every conversation seems to follow the same pattern. They spend 25% of the discussion talking about the challenges and solutions of getting through the COVID shutdown, and the remainder of our time sharing the exciting new opportunities they have in the pipeline: Creative projects. New departments. Game-changing technology. Growing workforces. Record revenues. It’s impossible to leave these conversations with a doom and gloom attitude about the future of our nation.

COVID fears will subside. Elections will continue to come and go. The American entrepreneurial spirit will live on and continue to provide the opportunities and growth we have come to take for granted.