The state-mandated shutdown of businesses, from retail to restaurants, is certain to exact a grim toll. When the first baby reopening steps are taken after May 20, no one can yet know how many businesses that closed their doors in March will never welcome customers again.
But another measurement of the shutdown’s damage to the economy is a metric that’s harder to come by: How many new companies that would have opened this spring before the pandemic struck never did?
During the recession of 2008-09, well-known startups like WhatsApp, Venmo and Slack were born and later grew into powerhouses. Now, in the face of the looming COVID-19 recession, some economic optimists have looked to these successful startups as a sign that a second 21st century economic downturn may spur entrepreneurial innovation and resourcefulness.
But the candidate pool is shrinking. According to the personal-finance website SmartAsset, new business applications in Connecticut have declined by nearly 20% since the coronavirus crisis erupted this spring.
For the four-week period from March 23 through April 19, new-business applications in the Nutmeg State totaled just 1,180 — a decrease of 19% compared to the five-year average of 1,456 for the same early-spring time period.
That ranks Connecticut’s business-startup performance eighth-worst in the nation. We’re hardly alone: New-business starts for the same period declined in 49 states as a result of the public-health emergency. Only tiny Delaware escaped the commerce carnage.
The worst performance was turned in by neighboring New York, the U.S. epicenter of the virus, where applications for new businesses declined by nearly a quarter (24.08%) in March and April.
Connecticut’s new-business performance was more closely aligned with another neighbor, Massachusetts, which saw new business applications fall to 2,710 for early spring 2020, also down about 19% from the Bay State’s five-year average of 3,334 starts.
Data for the SmartAsset report comes from the Business Formation Statistics published by the U.S. Bureau of the Census.
