Business

Etsy Solves One Economic Mystery

Since the epidemic, the growing number of new businesses has puzzled economists.

According to the Bureau of Population Census data5.4 million new businesses submitted applications in 2021. This is an increase of 23% from the 4.4 million applications submitted in 2020. This is 54% higher than the number submitted in 2019 – before the plague closed the economy.

Starting a business usually involves risk. The business owner needs to finance start-up costs that can include inventory and real estate. The surge in starting a business can indicate that America is becoming the least risk-averse.

The reduction in risk aversion appears to be inconsistent with the risk reduction efforts that have been a part of daily epidemic life. Economists wondered if this showed a trend of self-employment.

Recent data from the Federal Reserve Bank of St. Louis Explains What happened.

The researchers noted: “Although there has been an increase in many sectors, it is the retail trade sector that has experienced the largest increase in applications – an increase of 79.2%, which amounted to 20% of the total increase in applications.”

Millions of Americans have driven this rise by getting an employer ID number for their Etsy store. The EIN is used instead of an ID number to report taxes.

Etsy’s active sellers soared against the backdrop of COVID-19

Etsy indicates economic insecurity

At the end of 2021, there were 5.3 million Etsy sellers. This is an increase from 2.5 million at the end of 2019.

The rise in new business applications does not reflect risk appetite as it shows people who want to supplement their income. This is a sign of economic insecurity.

The Bottom Line: This is the latest sign that the economy is not as strong as many economists believe. Businesses were created for fear of more traditional reasons.


Michael Carrhe The editor of Masters of True Options, One Trade, Peak Velocity TraderandEarnings accuracy. He teaches technical analysis and quantitative technical analysis at the New York Financial Institute. Follow him on Twitter@MichaelCarrGuru.

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