Since COVID, the nature of the global economy has shifted. New business applications hit a previous all-time high in 2021 at over 5.4 million, nearly doubling from 2015. Many attributed the surge in the number of new business applications to former entrepreneurs reopening businesses that failed during the pandemic or surplus transfer payments received from the government. However, as you can see from the chart below, the trend continued to accelerate with 5.0 million new business applications in 2022 and a record breaking 5.5 million in 2023. Calendar year 2024 has also started out strong as the U.S. Census Bureau reported that 436,358 new business applications were received during January alone.
This data would suggest that the engine behind the global economy has somewhat shifted – and it looks like this will be another “new normal.” As this shift occurs, we must be careful not to take one set of data and draw a conclusion as to how the financial markets will react. As noted above, the economy is currently riding a tailwind of large numbers of business formations along with an unemployment rate at or near a fifty-year low. However, it remains to be seen as to what number of these small business will survive over the next few years and what will ultimately be their contribution to economic growth. Are they perhaps part-time businesses, meant to supplement a decline in real income as a result of post-COVID inflation? These are some of the questions we will continue to ask ourselves as we evaluate the economy. It is important not to confuse correlation with causation. As economies and financial markets shift, as investors, we will continue to have an open mind and evolve our methodologies as well.
“This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.
Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”
Copyright (c) 2024 Clearnomics, Inc. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.
