Claim: Joe Biden says his presidency has seen record small business creation.
“I’m proud to say if you look at my presidency so far, it’s a jobs presidency, and it’s a small business presidency,” Biden said on Monday. “Here’s what the record shows. Record job creation. Record economic growth. Record new small business creation. That’s the story that should give us confidence about the economy that we’re building. Confidence in ourself. Confidence in the future.”
“Our economy is creating new businesses — lots of new businesses. In fact, Americans are starting small businesses at a record rate — up 30 percent compared to before the pandemic,” Biden added.
Verdict: Lacks context.
The highest monthly number of business formations was in July of 2020, under President Donald Trump, when Census Bureau data show 552,748 thousand applications for new businesses were filed.
That number was high because so few businesses were started in March and April, when much of the economy was locked down and entrepreneurs put plans on hald. Many other businesses closed because of the pandemic and lockdowns. The combination of pent-up demand for business formation and people restarting economic activity led to historically high levels of business formation in the latter half of 2020.
If we look at business formation from July through October, both the total and the monthly average were higher under Trump. Total formations for the period added up to 1.89 million in 2020 and 1.74 million under Biden. The monthly average for the period was 472,543 under Trump and 435,242 under Biden.
Of course, the year-to-date totals favor Biden because the depressed numbers from the early months of the pandemic dragged down start-ups. So this year has seen record-high start-ups, that is mainly for the same reason Trump saw record high startups in the second half of 2020: pent up demand, restarts, and an economy accelerating as the pandemic’s drag fades.
Put in the proper context, the recent small business growth is mainly a reflection of an economy recovering from the pandemic rather than a result of either president’s policies.