17 Jun Small Business Economic Recession Fallout
Boostability is covering the COVID-19 outbreak through a series of posts designed to help you and your business succeed during this time. You can read the rest of the coverage here.
Part of the struggle we’ve all faced during the coronavirus pandemic is just the sheer uncertainty of it all. One day it’s total doom and gloom. The next, there’s some good news. We’re just trying to figure out the effects of the virus while trying to keep some semblance of the economy going.
Part of the stress of 2020 goes to just not being quite sure of what’s coming next. We just don’t know what will happen. Is it safe to open our doors? Is it safe to socialize again? Should we continue to isolate when possible?
I’ve talked with many small business clients throughout the pandemic. Many of them are our own clients. The common thread is not being sure how they’re going to make it through this with no customers and no way to support themselves. We’re all trying to get through it together.
But we could be seeing some good news on the horizon. This means, things could start to see some improvement.
The NFIB Index
The National Federation of Independent Business is a non-profit group, founded in the 1940s, and advocates for small business in local governments and with the federal government. They have membership resources to help small businesses succeed in all aspects. Every month, they put out a series of polls and reports to gather sentiment data from small businesses across the United States to learn about the status of business and create forecasts. Many use this report as a way to forecast trends moving forward.
We can all agree that small businesses got hit by the COVID-19 pandemic harder than most. So a sense of optimism in the future is fantastic news.
The May 2020 Report
The NFIB’s most recent report says that small businesses expect the recession to be short lived. And that’s good news for just about anyone. After seeing massive drops in sales forecasts in April, any news in the positive direction is good. The NFIB’s Small Business Optimism Index and Uncertainty Indexes both saw moves in the right direction as small businesses slowly start to open their doors.
In fact their forecast shows growth in the next six months, doubling what Wall Street predicted. Many expect to start hiring again in the next six months, tho maybe not to the levels they had previously.
They say at the end of the day, forecasts of increased sales are improving after hitting basically rock bottom in April. This is wonderful news as people start to look ahead.
Other Economic Indicators
Most states started to loosen restrictions in early May which fueled the initial boost in optimism. Many still have some restrictions in place. But all 50 states have loosened restrictions beyond what they were in March and April.
A MarketWatch report says, “If small businesses are the canary in the coal mine, the economy appears to have gotten past the most dangerous phase of the effort to stop the spread of the virus. Yet it could be at least a year or even longer before growth and employment return to pre-crisis levels, most economists contend.”
The Bureau of Labor Statistics reported in early June that 80% of those who lost their jobs during the pandemic expected to be rehired. The latest jobs report was surprising with 2.5 million jobs added in May. The report also stated, “employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade,” even as jobs in the government continued their decline.”
Before COVID Predictions
Before the world entirely shifted in the matter of a couple weeks, the economic forecasts for small business in 2020 was very positive with all indicators pointing towards growth. Due mostly to the signing of a new trade agreement with China, experts forecasted growth for 2020 as extremely high after some uneasiness last summer during the trade war.
Small businesses forecasted growth for 2020 through several polls conducted by CNBC and Quickbridge respectively. In the latter survey of over 500 businesses, they remained optimistic about growth for the year. 82% in fact predicted sales growth in 2020.
And even though the world where we expected this growth in 2020 no longer exists, that doesn’t mean it can’t come true. As we all adjust to the new normal as we now dub it, we will definitely face hurdles as we try and grow. There’s months of revenue to be made up. But we can all support small businesses in our communities as we work to make up for lost time.
And of course, much of this depends on what will continue to happen with the coronavirus. With the resurgence of cases in many states, people are starting to become uneasy again. Though most state governments are moving forward with re-opening plans to keep the economy moving.
However, we view some optimism in the economy as signs of celebration. Optimism inspires confidence. As more people are comfortable spending, the confidence will continue to rise. And we hope to see new growth for our small business customers.