The U.S. Thinks Of Itself As Entrepreneurial. But It’s Slipping.
The U.S. Thinks Of Itself As Entrepreneurial. But It’s Slipping.
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Feb 28, 2026, 04:31pm EST
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Only a handful of ideas become real businesses. The conditions that create success could be fading.
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Entrepreneurship in the United States is starting to run on cultural fumes. On key structural measures, including on the composite index that tracks whether a country supports new business formation, the United States is becoming a harder place to start a company, according to the Global Entrepreneurship Monitor's 2025/2026 report, released in February.
While the United States is still a very entrepreneurial country – it ranks fourth in entrepreneurship behind Canada, the UK, and Saudi Arabia – the report shows potential trouble ahead for the job-creation engine of the U.S. economy, small businesses. GEM, a nonprofit research consortium based in London with a U.S. center at Babson College, surveys adult populations across more than 50 economies each year to track entrepreneurial attitudes, activity and conditions.
The United States has long been an innovation powerhouse, especially in the era of Silicon Valley. And AI adoption may make it much easier to start companies, though how the AI effect will play out in terms of number of companies, number of jobs, and income remains anybodys guess.
However, the report makes it clear that some of the conditions that helped turn the idea of entrepreneurship into real businesses are changing in the United States, and not for the better. The United States scored sufficient only on five of the conditions for entrepreneurship.
The United States scored sufficient on only five conditions that lead to entrepreneurship.
Elizabeth MacBride/GEM
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The two finance-related conditions together tell an interesting story: The United States scores adequately on the availability of entrepreneurial finance (4.7, 17th) but drops further on ease of access to that finance (4.2, 18th). That suggests capital exists in the ecosystem but isn't reaching entrepreneurs as readily as it should.
The steepest deterioration is in education. Entrepreneurial education at the K-12 level scored 3.0 in 2025, down sharply from 4.1 in 2024 — one of the largest single-year declines in the report. Government support and R&D-to-market transfer conditions are also rated insufficient and worsened year-over-year. The one area of measurable improvement was regulatory burden: ease of market entry improved notably, reflecting deregulation efforts that are registering in expert assessments.
Overall, the report points to an economy where household financial stress is pushing people toward self-employment. The share of American adults reporting that their household income has fallen stood at 24% in 2025. While that is down from a pandemic peak of 39% in 2020, it remains elevated by historical standards — and GEM's broader global data underscores the point: 32 of 48 economies surveyed report more household income declines than increases.
Against that backdrop, 69% of new American entrepreneurs say they're starting businesses partly because jobs feel scarce, placing the U.S. alongside Bahrain, Qatar, and the UAE on that measure. Economists distinguish between opportunity-driven entrepreneurship, where founders pursue market gaps and innovation, and necessity-driven entrepreneurship, where individuals start businesses because conventional employment feels inadequate or unavailable. The U.S. figure suggests a meaningful share of American startup activity now falls into the latter category.
Fear of failure is also a growing constraint, not just in the United States. Globally, GEM finds that in the majority of participating economies, at least two in five adults who recognize a good business opportunity are deterred by the perceived costs of failure. That figure has held stubbornly constant in the U.S. for years. The fear is not irrational: in an environment of economic uncertainty and declining household incomes, the financial consequences of investing several years in a startup idea that doesn't survive can be severe and difficult to recover from. Fear of failure that tracks with actual economic fragility is a rational response.
The GEM report also finds that businesses are being formed — roughly one in five American adults is starting or running a new venture — but established business ownership is declining. Many businesses start; few succeed.
Certain underlying conditions remain strong. American social and cultural norms around entrepreneurship score 7.0 out of 10, ranking seventh globally among the 53 economies surveyed. Physical and commercial infrastructure score well. On trade, new tariffs created headwinds for entrepreneurs relying on global inputs or export markets, while a weaker dollar improved price competitiveness for some. The net effect is a mixed policy environment whose impact varies considerably by industry.
On its cultural assets — the social legitimacy of risk-taking, the relative absence of stigma around business failure —the United States remain globally competitive. That’s still really powerful. Culture overcomes policy any day. But the whole picture tells a story of gradual erosion: in education, in government support, and in the conditions that allow startups to survive and scale rather than simply form and fail.
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