According to recent data from the US Census, business applications are up almost 40% from last year, with most of that happening in the third quarter of 2020. The charts below show percent changes for week 41 (out of 52) for 2020 and 2019. For week 41, there are 38.9% more applications this year than in 2019. For comparison, the applications in 2019 were 12.7% higher than 2018, which was only 4.0% higher than 2017.
The chart below shows a skyrocketing increase in applications in the third quarter of 2020. We didn’t see these kinds of increases during the great recession (in red). So, why do we see this now? What is different this time around? I’m wondering if people are re-starting old businesses. Even so, I would have expected to see a dip in the second quarter, but there isn’t one.
Last time, there were financial factors creating the crash. This time, it’s much more intense, with entire sectors of the economy shutting down for months. World travel came to a near stand still. This is global and is greatly impacting supply chains for manufacturing and retails sectors. This is a horse of a different color. We are still having to wait and see what happens as we head into cold and flu season. Our physical health is at risk. Our financial and economic health is at risk. We are also heading into the retail sectors favorite time of year. But this year will be different – less travel, less shopping, less events and parties.
We still don’t know if we will see another wave of shut downs and hospital crises. We are still playing wait and see.
[ Note: You can learn how to create your own bar charts using FRED data with this pdf.]