U.S. business formation tumbles 28.5% in fourth quarter

FILE PHOTO: People walk by a store going out of business along 125th street in the Harlem neighborhood of New York City, New York, U.S., August 7, 2020. REUTERS/Shannon Stapleton

WASHINGTON (Reuters) – Applications to start new U.S. businesses plunged in the fourth quarter as COVID-19 continued to ravage the economy, supporting views that it could take years to recover the millions of jobs lost during pandemic.

The Commerce Department said on Thursday business applications dropped 28.5% to a seasonally adjusted 1.115 million last quarter. All four regions recorded a decrease, with steep declines in the Midwest, South and West.

The coronavirus crisis has worsened, with restaurants and other consumer-facing businesses suffering the most. The economy has recovered 12.4 million of the 22.2 million jobs lost in March and April, when the crisis started in the United States.

At least 18.4 million Americans are on unemployment benefits. Economists expect employment will return to its pre-pandemic level in the 2023.

The Commerce Department’s Census Bureau, which compiles the business formation data, said the report will no longer be released on a quarterly basis. Instead, reports will be published monthly starting with January data, which will be released on Feb. 10.

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