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For the first time on record, U.S. companies are actually dying at a faster rate than they're being born, according to an analysis by the Economic Innovation Group, a non-profit research and advocacy organization.

Why it matters: The slow rate of business starts means the U.S. economy is powered by a narrowing segment of companies, people and geographies — making the overall economy less resilient than it was after previous recessions. When fewer new companies are being born, it's less likely that the companies and jobs that are disappearing will be replaced by better ones. And without competitive pressures from upstarts, big companies are able to grow bigger faster, increasing industry consolidation.

Expand chart
Data: Census Bureau; Chart: Chris Canipe / Axios

"This is new territory for the U.S. economy," said John Lettieri, co-founder of EIG. "Firms that don't get created don't create jobs...The ripple effects are really hard to overstate."The birth rate of new companies collapsed with the Great Recession, and the number of firms that opened during the recovery period is lower than that of any other post-recession period.

The U.S. economy is increasingly reliant on a few metropolitan areas' expansion of companies. Between 2010 and 2014, five metro areas produced the same net increase in firms as the entire rest of the country:

  1. New York
  2. Miami
  3. Los Angeles
  4. Houston
  5. Dallas

Essentially, this means that the number of markets with expanding bases of new companies are dwindling down to a few "hubs," a big departure from the previous three decades when almost all U.S. metro areas consistently created more than enough new companies to replace the ones that closed. In the 1970s, more than one-third of metro areas met or exceeded the national startup rate. By the 2010s, only one in seven metro areas matches or exceeds the national startup rate.

What it means for communities: Areas where a lot of new companies are created tend to enjoy the benefits of stronger local economies, including opportunities to switch jobs, move between regions and earn higher salaries. Fewer communities are now experiencing those benefits, helping to fuel regional inequality, according to EIG. Already-disadvantaged areas seem to suffer the most from the startup slowdown, while thriving areas (typically centered around bigger cities) continued to grow more prosperous.

What happened? EIG suggests declining population growth, a sharp decline in startup capital (notably home equity) during the recession, and changes to the regulatory environment have been factors. The group's full analysis can be found here.

Be smart: This plays into the growing gaps we see across the country between the haves and have-nots, the urban and rural areas — and even political views.

Go deeper

Lawmakers call for Israel-Hamas ceasefire amid aerial bombardments

Combination images of Republican Sen. Todd Young and Democratic Sen. Chris Murphy. Photo: Michael Reynolds-Pool/Getty Images/Greg Nash-Pool/Getty Images

Sen. Todd Young (R-Ind.) and 28 Senate Democrats on Sunday called for a ceasefire between Israel and Hamas as fighting continued into the night.

Driving the news: In the first bipartisan call for a ceasefire, Young, a ranking member of the U.S. Senate Foreign Relations Subcommittee on Near East, South Asia, Central Asia and Counterterrorism, joined its Chair Chris Murphy (D-Conn.) a statement saying: "Israel has the right to defend itself from Hamas' rocket attacks, in a manner proportionate with the threat its citizens are facing.

Bill Gates faces scrutiny over relationship with Microsoft employee, Epstein ties

Photo: Alessandro Di Ciommo/NurPhoto via Getty Images

Representatives for Bill Gates pushed back on claims Sunday that he left Microsoft's board because of an earlier sexual relationship and against two other reports detailing more extensive ties with Jeffrey Epstein than had previously been reported.

Driving the news: Microsoft said in an emailed statement to Axios that it "received a concern" in 2019 that its co-founder "sought to initiate an intimate relationship with a company employee in the year 2000," but denied a Wall Street Journal report that its board members thought Gates should resign over the matter.

AT&T in talks with Discovery to combine media assets

Illustration: Annelise Capossela/Axios

AT&T is in talks with media giant Discovery about merging its media assets, like CNN, TBS and TNT, according to two sources familiar with the discussions.

Why it matters: A potential merger could allow AT&T and Discovery to better compete with entertainment giants like Disney and Netflix in the video streaming wars.