2023 POLICY ROADMAP

The US economy was doing well in 2023, reflected by low unemployment, and with GDP having grown in
all quarters since 2022 (at an annualized rate of just under 5%). However, inflation was showing some signs of starting to edge upwards again after having fallen to around 3%. Since February 2023, wage increases had outpaced inflation, raising living standards for those in work, but increasing business costs.

The focus of US policy has been for the Federal Reserve to increase interest rates to reduce inflation, but also making access to capital more expensive for entrepreneurs. However, the “Inflation Reduction Act” has created new opportunities in green and environmental sectors.

2023 Framework Conditions Review1

Economic growth in the United States has been stable, despite some deterioration in Entrepreneurial Framework Conditions (EFCs), with expert scores for both finance EFCs (sufficiency and accessibility) falling sharply, as did the score for Commercial and Professional Infrastructure. Partly as a result, only four EFCs scored as sufficient (score of ≥5) in 2023, down from six in 2022. Both finance framework condition scores fell to less than sufficient, as did the score for Ease of Entry: Market Dynamics, although Government Policy: Taxes and Bureaucracy improved its score to just sufficient.

In 2019, experts rated the entrepreneurial environment in the United States as more than sufficient, with a National Entrepreneurial Context Index (NECI) score of 5.3, placing it 10th among all GEM participating economies. In three of the four years since, that overall score has fallen. In 2023, the score fell to 4.8, less than sufficient overall, with a rank of 16th.

A number of other developed economies in Europe and North America also had overall entrepreneurial environment assessments that have shifted from sufficient to less than sufficient since 2022, including Norway, Sweden, Germany and Canada, with France and Latvia coming close. This may simply mark the withdrawal of COVID-19-pandemic business support schemes, or may be an indication of the slow relative decline of once dominant economies.

2023 Entrepreneurial Activity Review

The United States has long been a bastion of entrepreneurial activity, with a level of Total early- stage Entrepreneurial Activity (TEA) in the high teens for at least the past five years (touching 20% in 2022, but falling back to just under 15% in 2023). Men are more likely than women to be starting or running a new business, but the difference is both small and narrowing. More than half of adults in the United States consider that there are good opportunities to start a business locally, while just under a half know someone who has recently started a new business, or consider themselves to have the skills and experience to do (but for the first time in the past five years, this proportion has fallen below around two-thirds). Over the same period, the proportion of adults who see good opportunities but would not start a business
for fear it might fail has remained just over two in five. Meanwhile, just 12% of those adults not currently involved in entrepreneurial activity intend to start a business in the next three years.

More than three in five of those starting or running new businesses agreed with the motivations to make a difference in the world, to build great wealth or very high income, or to earn a living because jobs are scarce. Despite the large home market, three in 10 new entrepreneurs have customers outside of the United States, and job creation expectations are high, with the same proportion expecting to employ another five people or more over the next five years. However, the proportion of those new entrepreneurs expecting to use more digital technology to sell their products has fallen since this question was introduced in 2021, from 61% to 46%. It may be that digitalization levels were already high.

Overall, the results are consistent with the country’s reputation for providing a favourable environment
for entrepreneurship, although the gradual drift in framework conditions may present some concerns.

1 A brief description of the GEM approach is given in the footnote on p. 107 of the GEM Global Report.