US Small-Business Recovery, Most Now Operating Again

US Small-Business Recovery, Most Now Operating Again

#SmallBusiness #Recovery

Only about 2.7-M job losses in the US can be attributed to shuttered small businesses since the start of the coronavirus chaos, or about 18% of the total, according to a study that found that those firms have been surprisingly resilient so far.

The report shows that the majority of employees let go in early temporary closures are now back at work.

The job losses from small-business closings as of July are down from a peak of 10.7-M as of April, suggesting reopenings helped drive the better-than-expected employment reports of recent months.

Note: Active small businesses cut jobs as too, so the overall effects of the chaos on employment are probably higher, according to the 16 August report.

Among optimistic economic signs is an all-time high in business formations filed with the IRS, including so-called high-propensity applications that are likely to lead to new wage-paying businesses, according to the report.

Most small businesses that responded to a July US Chamber of Commerce survey reported being able to sustain operations for at least another 6 months without permanently closing.

A major unknown is what will happen once support from the $669 billion federal Paycheck Protection Program (PPP) and other aid to small businesses wears off. With little chance that a new aid/relief/stimulus deal before September there could be more challenges for small firms.

So far, the US appears to have avoided the surge in C-19-related permanent business shutdowns that many feared at the chaos’ onset because the PPP and other Trump policy support helped businesses survive the sharp pullback.

There is a fairly high rate of bankruptcy filings among large companies, although most appear to have had unsustainable capital structures even before the medical emergency crisis, according to the report.

Overall, bankruptcy filings by large companies could hold back US employment growth by 94,000 jobs a month if they stay at their current levels, according to the study.

Have a healthy weekend, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.