Why do many economists believe that the best time to start a new business is toward the end of a recession?

Many economists advocate for starting a new business toward the end of a recession because it typically coincides with various favorable economic indicators. As the economy begins to recover, GDP growth starts to trend upward, indicating a general improvement in economic health. This gradual recovery creates an environment where consumer spending may also increase, allowing new businesses to thrive.

Additionally, during this phase, businesses that have managed to survive the recession often begin to expand and add jobs, which can contribute to a growing market for goods and services. This expansion reflects rising confidence in economic stability, providing new businesses with potential customer bases.

Bank lending practices also tend to improve after a recession. Financial institutions become more willing to extend credit, which is crucial for new or expanding businesses that often rely on loans for startup costs and operational expenditures. Easier access to financing can significantly enhance the viability of launching a new venture.

Taken together, these factors illustrate why the end of a recession presents a strategic opportunity for entrepreneurs to enter the market, making the cumulative response the most accurate choice.