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Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here. |
Business applications are an interesting window into the lingering effects of the pre and post-pandemic economies. Applications for new Employer Identification Numbers (EINs) have dropped fairly dramatically in the last 5 months, however, they remain significantly above pre-pandemic levels. In November 2023, there were more than 100,000 business applications. This past month that number was 71,468, still far higher than the pre-pandemic peak of 48,009.
For the most part, this trend is attributable to the rise and continued popularity of the gig economy. Despite the recent reduction in applications, the gig economy remains a very popular source of income and individual business, with approximately 58 million Americans having some freelance job, whether it's rideshare, delivery, writing, tutoring, pet care, or handyman services.
However, when a data series of this importance becomes so destabilized, it's always important to ask if something else has changed. And indeed, it did. Beginning with the pandemic relief funds, it became increasingly important to document new business ventures. A decrease in the threshold of reportable business revenue (1099 form) from $20,000 pre-pandemic to $600 post-pandemic materially changed the game, as did reporting requirements for many gig-related apps. Unfortunately, these data series feed into estimates from the BLS for non-farm payrolls through the notorious "Birth/Death" model which accounted for more than half of all jobs last year. Needless to say, we are skeptical.
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Learn more about the Market Situation Report written by Tier 1 Alpha. |
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