U.S. Entrepreneurship Remains Strong Despite Challenges, Report Finds

The United States continues to be a powerhouse of entrepreneurial activity, according to the latest Global Entrepreneurship Monitor (GEM) report. However, experts warn that the country's entrepreneurial framework conditions have shown signs of deterioration.

The 2023/2024 GEM report, marking 25 years of global entrepreneurship assessment, reveals that nearly 15% of U.S. adults are engaged in early-stage entrepreneurial activity. While this represents a slight decrease from the previous year's 20%, it still places the U.S. among the top economies for new business creation.

"The entrepreneurial spirit in America remains resilient," said Jeff Shay, team leader at Babson College, which conducts the U.S. portion of the GEM study. "Despite economic headwinds, we're seeing continued enthusiasm for starting businesses."

Key findings include:

• Gender Gap Narrowing: The difference in entrepreneurial activity between men and women is small and decreasing, with 13.4% of women and 16% of men involved in early-stage ventures.

• Positive Outlook: Over half of U.S. adults see good opportunities to start a business in their area, and 55.9% believe it's easy to start a business.

• Digital Adoption Slowing: The proportion of new entrepreneurs expecting to use more digital technology for sales has fallen from 61% in 2021 to 46% in 2023, possibly indicating already high levels of digitalization.

However, the report also highlights areas of concern.

The National Entrepreneurial Context Index (NECI) score for the U.S. has fallen to 4.8 out of 10, dropping from 10th place globally in 2019 to 16th in 2023."This decline in our entrepreneurial framework conditions is worrying," Shay noted. "It suggests we may be losing our competitive edge in fostering new businesses."

Experts rated several key conditions as insufficient, including entrepreneurial finance, ease of market entry, and government entrepreneurial programs. Only four out of 13 framework conditions scored as sufficient, down from six in the previous year

The report comes as the U.S. economy faces mixed signals. While GDP growth and low unemployment paint a positive picture, rising inflation and interest rates pose challenges for aspiring entrepreneurs.

As the U.S. navigates these economic crosscurrents, the GEM report underscores the need for policymakers and stakeholders to address the weakening entrepreneurial ecosystem. Maintaining America's entrepreneurial dynamism, it suggests, will require renewed focus on improving access to capital, reducing regulatory burdens, and enhancing entrepreneurial education.