As economic conditions rise, entrepreneurial endeavors fall

News from the Kauffman Foundation today indicates that one unintended, but perhaps not unexpected, result of a recovering economy is that entrepreneurship is falling.

According to a just-released study from Kauffman, as more Americans went back to work last year, fewer of them opted to launch startups of their own.

Here’s more from Kauffman:

As the unemployment rate fell in 2012, another economic indicator dropped too: the overall business creation rate.

According to the annual Kauffman Index of Entrepreneurial Activity released today, the 2012 rate declined slightly from 0.32 percent of American adults per month starting businesses in 2011 to 0.30 percent in 2012.

That translates to approximately 514,000 new business owners per month in 2012 compared to 543,000 the year before. The 2012 business creation rate is slightly higher than pre-recessionary and long-term levels.

To read the full report, visit:

“It’s likely not a coincidence that the number of new businesses created dropped when the economy improved last year. While a stronger economy is good for business growth, it also means the unemployed find jobs instead of starting firms,” said Dane Stangler, director of research at the Ewing Marion Kauffman Foundation, which conducts the annual study. “During the Great Recession when the labor market was at its weakest, business creation rates rose to record highs. The 2012 rates are a return to longer-term levels.”

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