Business closures were up sharply in Connecticut in the first quarter of this year. New data from the Secretary of the State’s office show that almost 3,300 companies closed their doors between January and March.
What’s known as churn -- the rate at which businesses are created and destroyed -- can indicate dynamism in an economy, but the trends in this latest batch of numbers could be cause for concern. The number of businesses closing went up 34 percent from the same time last year, with a sharp spike in March.
At the same time, business starts have gone down, falling five percent year over year.
Economist Don Klepper Smith said it may indicate the state is failing to compete. "We have to keep in mind that while our economic development train is moving down the tracks literally at two or three miles an hour, there are competing trains on parallel tracks going a little bit faster," he told WNPR.
The Affordable Care Act was supposed to enable entrepreneurship, severing the link between benefits and employment status for many, but that prediction hasn’t yet been verified by independent research of the data in the last year or so.
One factor that may well have influenced Connecticut’s business numbers is a particularly cold winter, which can often spell trouble for construction businesses and other outside occupations, so economists say they’ll be watching these numbers closely as the year progresses to see if the trends change.
