California Still Leads US In New Business Formation — But Growth Cools

California ranked No. 1 in the first half for new business starts at 35,880 — 11% of the 314,120 created nationally. After California came Texas at 32,210, Florida at 26,480, Georgia at 14,690, and New York at 14,310.


The economy’s rebound slowed this year compared to the frenetic pandemic recovery pace of 2021.

California had the 13th largest drop in new business starts — down 16% — in the first half vs. the same period in 2021. The drop was 14% nationally.

Biggest drops? Georgia, down 25%, then Ohio, down 21%, District of Columbia, Louisiana and Illinois, off 20%.

Best performances? New Mexico and Vermont, up 11%, Alaska, up 3%, Montana, up 1%, West Virginia, flat.

Arch-rivals? Texas? 27th worst, off 11% Florida? Sixth-worst, off 19%.

Bottom line

This year’s business creation is running ahead of the pre-pandemic pace of 2015-2019 — but California is a laggard.

The state had  12% more starts that the pre-pandemic average — but that was the eighth-slowest growth among the states. Growth was 26% nationally.

Fastest growth? Mississippi at 62%, then Delaware at 57%, Georgia at 54%, Wyoming at 48%, and Alabama at 47%.

Slowest growth? New York and North Dakota at 5%, District of Columbia, Colorado, and Washington at 9%.

Texas? No. 12 at 37%. Florida? No. 17 at 31%.

Politically speaking

It’s a mid-term year, so … Blue states — those who supported President Biden in 2020 — had 171,100 starts in the half, down 14% in a year vs. red states, those that didn’t support Biden, with 143,020 filings in six months, down 13%.

Another view

A ranking by a graphic designers at Looka graded California as the No. 1 state for entrepreneurs, writing “Though the cost of living in California is high, it has the highest number of businesses with fewer than 5 employees, highest annual payroll for employees, and the best survival rate for entrepreneurs. No wonder so many small businesses start off in California!”

Following California in Looka’s rankings were Texas, New Jersey, Illinois and Georgia. Worst? Rhode Island.


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