This study examines the level of new business activity throughout the U.S., and the relationship between this new business activity and the high levels of unemployment arising during the Great Recession. It provides an opportunity to address three questions: (1) How did entrepreneurial activity vary with levels of unemployment in the states of the U.S. during the Great Recession? (2) Did entrepreneurial activity associated with unemployment depend on prior levels of entrepreneurship in those states—that is, is there an interaction between unemployment levels and prior rates of entrepreneurship in predicting entrepreneurship during the Great Recession? (3) Did states with higher levels of entrepreneurial activity prior to the recession experience less unemployment during the recession?