Federal Reserve Economic Data

New businesses play an important role in fostering job creation, innovation, and economic growth. A common measure of business dynamism relates to the number of new firms or establishments entering the market.

In this FRED blog post, we identify the states with the largest and smallest growth rates in the number of business applications across all industries relative to 2005: We adjust the data* by the state’s resident population, set an index value of 100 in the year 2005, and graph the top 5 and bottom 5 states as of 2022.

So, where is business booming in the US? The FRED graph above shows the five states with the largest growth rates in the number of business applications between 2005 and 2022. Wyoming, Delaware, Mississippi, Georgia, and Louisiana lead the nation for growth in new business applications adjusted by their populations. For instance, in 2022, the number of new businesses in Wyoming was seven times greater than it was in 2005. In Delaware, the number was three times greater.

The second graph shows the bottom five states: Nevada, New Hampshire, Maine, Minnesota, and Massachusetts had the lowest growth rates in the number of new businesses relative to 2005. In 2022, the number of new businesses in Nevada was almost the same as it was in 2005, while in New Hampshire it was only 21% greater than it was in 2005.

All states experienced some increase in the number of new businesses between 2005 and 2022. But why is business formation so strong in the first group of states? These states have low (or no) corporate and personal state income taxes as well as privacy laws regarding the ownership of businesses. Taxation and business laws play an important role when deciding where to incorporate a new firm.

But could this be the result of unusual data in 2005? To answer that question, we also assess whether 2005 was an outlier by computing the growth rate in new businesses relative to 2006 and 2007. Although the growth rates are smaller at the top, Wyoming, Delaware, and Mississippi are still the leading states in business formation. The number of new businesses grew fivefold in Wyoming and doubled in Delaware between 2006 or 2007 and 2022. In contrast, Nevada and New Hampshire remain the least dynamic states with similar growth rates in new businesses for 2005, 2006, and 2007.

*FRED has data on business applications for an employer identification number (EIN) from the Census Bureau’s business formation statistics, available at the state level starting in July 2004 for all industries as well as for specific industries. FRED also has population data at the state level.

How this graph was created: In FRED, search for and select “Business Applications: Total for All NAICS in Louisiana.” From the “Edit Graph” panel, click the “Edit Line” tab: Modify the frequency to annual, and in the “Customize data” field search for and add “Resident Population in Louisiana.” In the “Formula” tab, type in a/b. Change the units to “Index” with a custom scale of “2005-01-01.” Have the date range as “2021-07-04” to “2022-07-04.” Finally, go to the “Format” tab and change the graph type to “Bar.” Repeat these steps for Wyoming, Delaware, Mississippi, and Georgia to create the first graph. Repeat these steps for Nevada, New Hampshire, Maine, Minnesota, and Massachusetts to create the second graph.

Suggested by Ricardo Marto and Hoang Le.

The FRED Blog has discussed why residents of richer countries live longer lives, on average, than residents of poorer countries. In short, higher income levels allow access to higher-quality healthcare and overall better living conditions. Today, we highlight a positive trend on this topic: The average life expectancy in poor countries is rising and gradually catching up to the average life expectancy in rich countries.

The FRED graph above shows data from the World Bank about the average number of years a person born in each year is expected to live. Each line represents a set of countries grouped by level of income: high income in red, medium income in green, and low income in blue.

The graph shows that, in 1960, the resident of a poor country was expected to live an average of 41 years. By 2021, their life expectancy had increased to 62 years. That’s still short of the 80-year average a resident of a rich country born in 2021 is expected to live, but proportionally closer than the gap recorded more than half a century ago. And the reason for that is declining infant mortality in poor countries.

B. Ravikumar and Amy Smaldone at the St. Louis Fed argue that larger numbers of newborns surviving to at least age 1 raise the average count of years individuals are expected to live. In other words, lower infant mortality rates in poor countries are driving their higher life expectancy rates. These researchers prove their point by presenting a counterfactual argument: If their argument were wrong, the life expectancy data shown in the above FRED graph would look very different.

For more about this and other research, visit the website of the Research Division of the Federal Reserve Bank of St. Louis, which offers an array of economic analysis and expertise provided by our staff.

How this graph was created: Search FRED for “Life Expectancy at Birth, Total for Low Income Countries.” Next, click the “Edit Graph” button and select the “Add Line” tab to search for and add “Life Expectancy at Birth, Total for High Income Countries.” Repeat the last step to add “Life Expectancy at Birth, Total for Middle Income Countries.”

Suggested by Diego Mendez-Carbajo.

The Bureau of Economic Analysis (BEA) produces economic accounts statistics that enable decisionmakers and researchers of all kinds to track and understand the performance of the nation’s economy.

One of BEA’s headline indicators is domestic economic activity. BEA uses three different—and, in principle, equivalent—statistics to estimate the dollar value of this activity. Each of these statistics offers a different perspective on the economy, and the FRED graph above shows them side by side.

• Red bars show gross domestic product (GDP), also known as the expenditure measure of domestic economic activity. GDP reflects the value of (and demand for) US-produced final goods and services and estimates present economic activity from the vantage point of consumers, investors, governments, and foreigners.
• Green bars show the value of gross domestic income (GDI), also known as the income measure of domestic economic activity. GDI reflects the income generated from producing goods and services and estimates present economic activity from the vantage point of workers, business owners, and others (such as governments and nonprofits) that participate in production.
• Blue bars show gross value added (GVA), also known as the production measure of domestic economic activity. GVA reflects the supply of production from US industries and estimates present economic activity from the vantage point of businesses, households and institutions, and the general government.

BEA data on GDP, GDI, and GVA are available at the same time with the third estimate of GDP for each quarter, as well as in annual updates and, as of September 2023, comprehensive updates. This is a historic achievement for economic measurement in the US.

This FRED Blog post is an adaptation of The BEA Wire’s “Musings from Mackinac Bridge: Three Ways to Measure Economy Offer Different Perspectives.”

How this graph was created: Search FRED for “Gross value added: GDP: Business.” Next, click on the “Edit Graph” button and select the “Line 1” tab to customize the data. Start by searching for “Gross value added: GDP: Households and institutions.” Click on “Add.” Further customize the data by searching for “Gross value added: GDP: General government.” Don’t forget to click on “Add.” Next, type the formula a+b+c. Next, use the “Add Line” tab to search for and add two more series to the graph: “Gross Domestic Product, Billions of Dollars, Not Seasonally Adjusted, Annual” and “Gross Domestic Income, Billions of Dollars, Not Seasonally Adjusted, Annual.” Last, use the “Format” tab to select “Graph type: Bar.”

Suggested by Diego Mendez-Carbajo.