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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

Biden plans to ask public to wear masks for first 100 days in office

Joe Biden. Photo: Mark Makela/Gettu Images

President-elect Joe Biden and Vice President-elect Kamala Harris sat down with CNN on Thursday for their first joint interview since the election.

The big picture: In the hour-long segment, the twosome laid out plans for responding to the pandemic, jump-starting the economy and managing the transition of power, among other priorities.

The quick FCC fix that would get more students online

Illustration: Sarah Grillo/Axios

As the pandemic forces students out of school, broadband deployment programs aren't going to move fast enough to help families in immediate need of better internet access. But Democrats at the Federal Communications Commission say the incoming Biden administration could put a dent in that digital divide with one fast policy change.

State of play: An existing FCC program known as E-rate provides up to $4 billion for broadband at schools, but Republican FCC chairman Ajit Pai has resisted modifying the program during the pandemic to provide help connecting students at home.

Dion Rabouin, author of Markets
20 mins ago - Politics & Policy

America's hidden depression

Biden introduces his pick for Treasury secretary, Janet Yellen, on Dec. 1. Photo: Alex Wong/Getty Images

President-elect Biden faces a fragile recovery that could easily fall apart, as the economy remains in worse shape than most people think.

Why it matters: There is a recovery happening. But it's helping some people immensely and others not at all. And it's that second part that poses a massive risk to the Biden-Harris administration's chance of success.