Startups growing now – especially tech startups – big business can’t be having a large effect

What's driving the boom. Haltiwanger says that, basically, two big buckets of new businesses are being created these days. New businesses in the first bucket are capitalizing on a huge post-pandemic population shift. Many office workers are now either fully remote or hybrid. "People are not spending five days a week at the office in major downtown areas," Haltiwanger says. Where people spend their time, they spend their money. Bad news for businesses in downtown areas. Good news for businesses where office workers live. That's why one of the big areas for new business growth is in food and accommodations, particularly in the outskirts of cities. Haltiwanger, together with Ryan Decker, calls this "the donut effect." There's now a hole lacking vibrant economic activity in many major business districts, and a delicious fried dough of new business opportunities in the suburbs surrounding them. Office workers need their doughnuts, coffee and sandwiches near their office, which is now more often at home. However, if the story of the new business boom were limited to just delis, gyms and doughnut shops in suburban areas, the upside would be somewhat limited. Sure, remote and hybrid work is a revolutionary change for a large fraction of the workforce, but the business boom it has fed could be seen as mostly just a geographic reshuffling of economic activity. Fewer coffee shops in Manhattan. More in New Jersey or Brooklyn. That would likely have only a limited upside for the economy. That's why Haltiwanger is much more excited about the other big bucket of new businesses he has identified in the data: tech startups. This boom is proving, he says, to be the most persistent. These tech startups come in many stripes, but one subcategory has really caught his and other economists' attention: startups working in artificial intelligence. "I think we're in a new tech wave," Haltiwanger says. "I think AI is the poster child of this."