New businesses are typically very small, so they’re not necessarily a strong factor in overall job creation. But they are a first step in the important process of “creative destruction”—the replacement of old, unproductive businesses by new businesses with new ideas, technologies, and processes. Eventually some of these new businesses will grow and become important factors in the economy, and a healthy economy makes it easy for these new businesses to be created. FRED now has data that allow us to compare this process across U.S. states.
The Census Bureau tracks the quarter and the U.S. state in which business applications are made. Then it tracks the quarter in which the new business appears on payroll data. This quarter-to-quarter measurement is obviously coarse, but it averages out to meaningful value given the number of these applications. The map above shows the average length of this interval for all businesses that become active within 8 quarters of their application. Note: This data series doesn’t include businesses that take longer than 8 quarters to open or that never open.
The Census caps the interval at 8 quarters because, honestly, who wants to wait forever for the statistics? In fact, if you want them even more quickly, there’s a measurement after 4 quarters, which is shown in the map below. Take a look for yourself to see where in the U.S. you think businesses open faster.
How these maps were created: Search FRED for “business formation duration” and click on any 8-quarter state-level series. Scroll down on the graph page to look for the related material and click on the GeoFRED map. Zoom out to see the entire U.S. For the second map, click on the cogwheel and select the 4-quarter series.
We watch oil prices fluctuate all the time. Of course, oil gets a lot of attention because it has visible and sometimes significant consequences for the rest of the economy. Other commodities may not enjoy the same status, but they often suffer the same fate of volatile prices. The FRED graph above tells the recent story of sugar. It’s remarkable that the price of a commodity produced and used across the globe can almost double for a while and then return to its original level. In fact, as the graph below shows for an earlier period, this volatility can be even more extreme.
What does it take to generate price spikes like these?
Supply issues, such as a world war
Poor harvests in the major producing regions
Political issues (For example, Cuba is a major producer of sugar cane.)
New uses, such as ethanol produced from sugar
Attempts at manipulating markets
In a way, all these factors combined to create the extraordinary sugar spike in 1920: World War I essentially shut down the sugar beat harvests in France, the U.S. Congress considered buying the entire Cuban harvest of sugar, and a speculative frenzy ensued.
Construction activity fluctuates with the weather and overall economic activity. In fact, it fluctuates much more than the economy in general, as many episodes of economic overheating and collapse have shown us. But construction has many facets that aren’t visible unless we look closely at the details by sector. The graph shows two types of construction that have changed quite dramatically over the past few decades: The building of religious edifices has nearly come to a stop and is now about a third of what it was 15 years ago. And the graph doesn’t even account for the impact of inflation. Contrast this with the rise in construction for amusement and recreation, which was about equal to religious edifices back in the early 1990s and is now five times as large.