◼ ECONOMICS
33economists, though African Americans’ jobless
rate continued to climb slightly, to 16.8%. And U.S.
retail sales jumped 17.7% in May from the previous
month. Adding to the air of optimism, there were
record-breaking increases in manufacturing activ-
ity in the New York and Philadelphia regions.
Statistics on business formation are less widely
scrutinized, but those, too, show improvement.
Businesses apply to the IRS for an EIN for tax pur-
poses, and economists use clues on the forms to
estimate how many of those new establishments
are likely to hire workers in coming months, says
John Haltiwanger, a University of Maryland eco-
nomicsprofessorwhoadvisestheCensusBureau.
In particular, the subcategory of “high-
propensity business applications” is considered
a bellwether of labor market trends and the over-
all health of the economy. Those applications have
rebounded surprisingly in certain states, particu-
larly in the South. In Georgia, filings for the full
13-week period from mid-March to mid-June since
the pandemic started are up 4% over the same
period last year.
Louisiana, Mississippi, and other Southern
states are also up for the period, while Northern
and Western states hit harder by the virus have
generally seen their rates of decline slow or expe-
rienced slight improvements recently. California
has seen its business formation numbers flat-
ten after 30% drops in March and April, Census
Bureaudatashow.“Forthepartsofthecoun-
trywhereweseethisrapidlyturnup,it’sa very
goodsign,”Haltiwangersays.“Quitestrikingly,the
Southis doingbetter.I thinkwhatthisis suggest-
ingisa veryunevenrecovery,andI don’tknow
whetherI fullyunderstandwhy.”
InNorthCarolina,restaurateurJimMoore
seesopportunityfromalltherealestatevacan-
cieslikelytoemergefromthepandemic.Histwo
fast-casualseafoodrestaurants,namedSkrimp
Shackaftera Southerntermforshrimp,haveben-
efitedfromthetroublesoffull-servicerestaurants,
andCovid-19’s economic fallout may allow him to
open more locations at lower cost. Meantime, he’s
exploring a virtual restaurant concept, in which
he’d sell food only through third-party delivery
firms such as DoorDash without operating a sep-
arate brick-and-mortar store. “There will be a lot
of restaurants that were on the edge and maybe
are taking this opportunity to walk away,” Moore
says. “We’re going to take a look.”
The business formation data come with some
caveats. Because the deadline for filing tax returns
was moved back to July 15, it’s possible some
entrepreneurs also delayed applying for an EIN.
Thatcouldhaveartificiallypushedupbusiness
formationnumbersinrecentweeks,saysTim
Dunne,aneconomistattheUniversityofNotre
Damewho’sworkedwiththedata.Also,someof
therecentuptickmightbefromentrepreneurs
playingcatch-upafterdelayingfilingearlierin
thepandemic,saysMarkZandi,chiefeconomist
atMoody’sAnalytics.
NeilDutta,headofeconomicsatRenaissance
MacroResearchinNewYork,istakinga bullish
view.Hepublisheda shortnotetoclientsonthe
upturninbusinessformationsrecently,notingthat
manypeoplecommentedonthesharpdownturn
inEINapplicationsinMarch,butfewernotedthe
morerecentrebound.HesaysWallStreetecono-
mistsandthefinancialmediamayhavegottentoo
gloomy.“Ithinkmanypeoplemissedtherunup
instocksandarenowtryingtoexplainawaythe
rallybytalkingdowntheeconomy,” hesays.
�MichaelSassoandSteveMatthewsTHE BOTTOM LINE Applications filed by new businesses are up
sharply in some states in the South, which could help speed an
economic recovery.▲ Price