More Americans are turning to entrepreneurship as household budgets tighten, driving a record surge in new business registrations across the United States.
Data released by business services provider Registered Agents showed that 624,915 companies were formed in March, the highest monthly total on record. Momentum carried into April, when another 560,194 businesses were registered, up 9% from the same period a year earlier.
The spike in business formations comes as many households continue to struggle with elevated living costs, slower wage growth and weakening consumer confidence. Inflation remains stubbornly above the Federal Reserve’s target, with April consumer prices rising 3.8% before seasonal adjustment, according to the latest government data.
For many workers, launching a side business appears less about ambition and more about necessity. Registered Agents said a growing number of “under-employed” Americans are building additional income streams to offset pressure from rising food, fuel and housing costs.
Florida Led the Country for New Registrations
Registered Agents said Florida recorded the largest number of new filings in March, with more than 67,000 business registrations. Texas followed with 47,348 filings, while California and Delaware recorded 40,399 and 28,882 respectively.
The company linked the trend to mounting pressure on consumer finances. UBS chief economist Paul Donovan recently noted that several highly visible household staples have climbed sharply in price since President Donald Trump returned to office, including coffee, beef, gasoline and vegetables.
Those increases appear to be weighing heavily on public confidence. The University of Michigan’s consumer sentiment index fell to 48.2 in May, near levels last seen during the inflation shock of mid-2022.
At the same time, side hustles are becoming increasingly mainstream. A KeyBank survey published last year found that 35% of Americans had either started or planned to start secondary income streams to help cover everyday expenses.
The latest figures suggest many of those ventures are now being formally registered as businesses rather than remaining informal freelance work.
Molly Cavanah, vice president of revenue growth and data at Registered Agents, said the figures reflect a broader shift in employment behaviour.
“We are witnessing a profound shift in the American workforce,” Cavanah said. “This growth is in direct response to an economy where ‘under-employed’ Americans are building side hustles to bridge the gap between rising costs and limited income.”
Side Hustles Become a Larger Part of the Economy
The rise in entrepreneurship mirrors a broader transformation in how Americans earn income. According to the US Census Bureau, applications for employer identification numbers have remained historically elevated since the pandemic-era surge in self-employment and remote work.
Research from McKinsey & Company has also pointed to the expansion of independent work across the economy, particularly among younger workers seeking flexibility or supplementary income. What began as a temporary response to economic disruption during the pandemic has increasingly evolved into a longer-term labour market shift.
Some economists believe the trend could eventually support broader economic resilience if newly formed businesses mature into stable employers. However, many side ventures remain vulnerable to weaker consumer spending and higher borrowing costs.
There is also growing evidence that confidence among business owners is improving even as consumer sentiment weakens. Registered Agents said 46% of surveyed entrepreneurs believed their businesses were in a stronger position than a year ago, while 54% said they felt optimistic about the coming 12 months.
Separate surveys point in the same direction. The Organisation for Economic Co-operation and Development reported a modest rise in business confidence in May, reversing weaker readings seen through much of 2025. Meanwhile, the Conference Board’s quarterly CEO confidence index climbed 11 points from the previous quarter, moving back above the neutral 50 mark.
Investors Will Watch Whether New Businesses Survive
The sharp increase in business formations may offer an important signal about the direction of the US economy over the next year.
If inflation remains elevated and wage growth continues to lag behind household expenses, economists expect more workers to pursue freelance work, consulting, online retail and service-based side businesses. The question now is whether these newly formed companies can survive in an environment of high interest rates and cautious consumer spending.
For policymakers and investors, the data highlights a split economy, where consumers remain pessimistic while entrepreneurs see opportunities to generate income independently. The durability of that optimism could become a key indicator for the broader small business sector through the rest of 2026.
