California business creation surged last year but lagged national rate
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New U.S. business applications hit a high-water mark in 2023, but California trailed the national average.
Why it matters: Small businesses are a cornerstone of the U.S. economy, employing tens of millions of Americans.
Driving the news: Americans filed nearly 5.5 million new business applications in 2023, per the U.S. Census Bureau, or about 16.3 for every 1,000 residents.
- California's rate of 14.3 applications for every 1,000 residents trailed the rest of the country by about 13%.
- Still, its rate is the highest since at least 2005, and it has more than doubled since 2009, during the depths of the Great Recession.
Zoom in: Small-business creation in San Diego lagged the state and nation.
- San Diegans filed nearly 45,000 total applications in 2023, or about 13.7 for every 1,000 residents.
Big picture: That's not only behind the state as a whole, it's well behind Los Angeles County (18.1 applications per 1,000 residents) and Orange County (15.5 applications per 1,000 residents).
- San Francisco County led the state, with 20.8 applications per 1,000 residents, while Sacramento County was second with a rate of 20.4.
The intrigue: Colorado Secretary of State Jena Griswold recently told state lawmakers that fraudulent business filings have been increasing rapidly across the country in the years since the pandemic.
- Often, filings duplicate existing legitimate businesses in an attempt to use them as cover for fraudulent activity.
The bottom line: Filling out the paperwork for a new firm is just one step, but it's at least a sign of confidence that small-business success is possible.
- Nearly 85% of consumers say they'll probably shop at a small business this holiday season, a new American Express survey finds, up 11 points over the last decade.
Editor's note: This story has been corrected to reflect that, in new business applications per 1,000 residents, it was San Francisco County that led the state (not Sacramento County, which was second).