Productivity proves innovation high---strong private business formation is driving innovation.

However, we’ve also seen, not just in the surrounding counties, although we’ve seen in terms of downtown areas, but actually across the nation, a surge in businesses in the innovative intensive industries, exactly the same kind of innovative intensive industries that played such a big role in the productivity surge in the 1990s and early 2000s, particularly the information sector and the professional, scientific, and technical services sectors. Those are those are sectors that are STEM intensive sectors. And if we just ask ourselves what sector is now, in the most recent data, the kind of the most important sector in terms of where business formation is coming in, it’s actually professional, scientific, and technical services.

It’s worth noting, and I’m not saying this is all AI, but new AI businesses they’re going they’re going to be classified either in the information sector or actually many of them are classified in the professional scientific and technical services industry. So, I don’t actually have the microdata to tell you, oh, yeah, this is AI. But I can tell you these are exactly the sectors that surged in the 1990s with all that productivity growth. And again, the last time we saw anything like this was the 1990s.

And so, to the extent that we regard a surge in entry in innovative-intensive sectors as a leading indicator of possible future innovation and productivity growth, this is a good sign.

So, my two-part story is on the one hand, I think some of this is reshuffling—restaurants and gyms and other kinds of support services for the people working from home. And the other part is a surge in entry in innovative intensive sectors.