Pandemic destroyed fewer U.S. businesses than feared, Fed study shows
According to Federal Reserve research, fewer than 200,000 businesses in the United States could fail in the first year of the COVID-19 pandemic, one that may have had a minor impact on Miller numbers and unemployment compared to what was initially feared.
Preliminary predictions that the epidemic would leave the United States “, on Main Street,” U.S.
Probably 600,000 businesses, most of which small businesses fail in any given year, and researchers at the US Central Bank estimate that between March 2020 to February this year, that number will increase from a quarter to a third. more.
This includes 100,000 “excessive” failures at companies involved in close contact services such as barbershops and nail salons, with a central bank’s research team most severely impacting the sector from collapse. Epidemic Economy.
When it comes to the catastrophe of the owners and employees of those companies, the authors wrote, “Our results may indicate a fresh update on the perception about popular failure … business failure.”
For the success of service-focused businesses, restaurants, grocery stores, and outdoor entertainment companies found more serious failures than usual, with the net result smaller than expected for the general economy.
“Many industries may see lower than average exit rates, and emerging businesses do not represent the bulk of employment in the United States,” the researchers wrote.
The study is the latest study to issue a positive note on economic recovery that is progressing faster than expected and most federal officials believe that more permanent losses will be avoided. Previous research predicted widespread commercial failure due to the epidemic, with 400,000 or more small companies going bankrupt.
The census and other surveys reflect the strain of some companies that continue to operate, for example, with banks, landlords and lenders acknowledging that their business is more likely to fail if the situation is normal with tenants. Can.
There are still no study reports on the loss of millions of jobs in companies left to lay off employees or reduce operations, or to disproportionate losses between races or ethnic groups. It is most commonly referred to in the most difficult industries.
But it is beginning to come around to one of the economic crises that could arise from an epidemic, and small businesses appear more stable than expected, and are effectively motivated by Czech security plan loans. And other federal aid. .
The Central Bank and the US government began flooding the economy last spring with loans and direct subsidies for businesses and homes, so personal incomes have also risen as unemployment has reached historic levels. .
The forgiving PPP loan, which accounts for more than 9.5 million companies, includes $ 755 billion in financing. Although there are about 30 million small businesses diversified in the United States, most include solo trainers who do not have employees, while the rest use only a few. Hence the failures of these occupations, even in high numbers, are not deeply registered in terms of overall employment.
Official government statistics on business failures are usually a year or more behind the actual destruction of companies. The Bureau of Labor Statistics of the Department of Labor and the Census Bureau of the Department of Trade have not yet released formal estimates of the epidemic’s final dollars to companies and their workers.
To add to the data shortage, federal researchers include available government information such as frequency, cell phone location data mapped with retail locations, references from the payroll processor’s ATP, and other resources.
They found that the initial apprehension of a major COVID-19 success could be attributed to the number of businesses closing in the spring of 2020, and by the end of August “there was no evidence of excessive, persistent inactivity in the business; the reality Closing it will be less than normal by the end of 2020. “