Although the pandemic environment has been devastating for the business community, small and medium-sized businesses in particular, current trends in business destruction and formation are showing more optimistic trends. 

The left chart shows the unemployment rate and business bankruptcy filings over time. The unemployment rate spiked higher than during the financial crisis, but has come down sharply and quickly. Bankruptcy filings, however, have not meaningfully picked up yet, likely due to fiscal support in the form of small and medium sized business loans and access to credit from the Federal Reserve. Still, we are not out of the woods yet as the pandemic continues. On the right chart, applications for business formation surged 77% q/q in the third quarter of 2020. While this is partially a reflection of backlogs from the earlier on in the pandemic, it also appears to be a sign of economic resilience and low rates.