The Recovery of U.S. Business: A Comeback Story
Table of contents
As states begin to relax their quarantines, let’s look at six States experiencing economic growth after reopening businesses. These six States will give us a picture of how a post-COVID-19 America might look in the near future. And according to the numbers from May, things could be pretty good.
The Bad News
Twice as many Americans have been put out of work over the last two months than during the entire Great Recession of 2008. Forty-two million workers in the US have lost their jobs as a result of the coronavirus. It doesn’t stop there. J.P. Morgan analysts wrote to investors last week in their US Weekly Prospects report predicting a real GDP forecast for the second quarter of 2020 at -31%.
Yet, there is hope.
The Good News
As businesses start to reopen, hiring conditions continue to improve. The number of unemployment claims have dropped for twelve straight weeks. According to Labor Department figures, about 80% of those unemployed in April are expected to be back at their jobs within six months.
By the end of this week, Apple will reopen (with restrictions, of course) 200 of the company’s 271 US retail locations. And 10 of those locations will be in New York City, the same city with the highest reported number of coronavirus cases. Big businesses don’t like to make dumb decisions, so this move by Apple speaks volumes.
Retail sales in May were up a record 17.7%, and consumer spending, making up 70% of all economic activity in the United States, increased about 8% in the same month. Sales at vehicle dealers were up 44.1% in May. As were restaurant receipts, which were up by 29.1%. The value of all May sales receipts was only under 6.1% of last May’s reported sales. Pretty cool considering that this is double the number economists had expected for May. Let the easing of pent-up demand flow!
By May 20th, each State that imposed a stay-at-home order begun to lift the restriction. The reopening of businesses varies from State to State, and in many cases from county to county. Let’s take a look at those states where we see economic growth instead of economic contraction.
According to J.P. Morgan analysts, Arkansas’ daily growth rate remains at 5%, which is very good considering the significant contraction earlier predicted by most economists. Six states—Arizona, South Carolina, Alabama, Arkansas, North Carolina, and Tennessee—have a daily growth rate of just above 3%.
Gym, fitness centers, and indoor athletic facilities were permitted to resume operations starting May 4th. By May 6th, barbershops and hair salons also had permission to reopen. Dine-in restaurants were allowed to open and operate at a third of normal capacity on May 11th, but groups of customers cannot exceed ten people.
By April 30th, the State’s stay-at-home orders had expired. Retailers and beaches have opened with restrictions. The same goes for gyms, athletic facilities, barbershops, hair salons, and nail salons.
Stores selling furniture, books, music, flowers, clothing, and accessories, as well as department stores, sporting goods stores, and flea markets, have been open since April 20th. These stores have to maintain 20% capacity. Restaurant dining is also now permitted. So have gyms, athletic facilities, salons, barbershops, and tattoo parlors (didn’t expect that last example, did you?).
Gov. Roy Cooper’s office developed a three-phase plan for managing the reopening of businesses in the State. Phase 1 began May 8th, allowing retail stores to open at 50% capacity. Childcare facilities for children with working parents or parents looking for work also opened. Phase 2 will permit restaurants to open but not nightclubs, gyms, or indoor fitness facilities.
On May 8th physical retail stores were allowed to open with strict distancing rules for customers and staff. Barbershops and salons were also included in the same order with the same physical distancing rules applied to retail stores. By May 11th, restaurants resumed dine-in services again.
Retail outlets, restaurants, and gyms have reopened. Both barbershops and salons have also reopened in 89 of the State’s 95 counties. This last bit of news highlights the regional management of relaxing business restrictions, which can and often does vary from county to county.
Growing Pains, It’s Not So Simple
As much as we enjoy reporting on those states experiencing an economic recovery, it should be noted that five of those six States are also reporting record levels of hospitalizations. Until a vaccine is developed, it seems that state and local governments will have to balance the costs of reopening with the costs of coronavirus resurgence.
This goes to show that when the coronavirus is contained, people will find work again. A lot of money is still to be made, and businesses will need to rehire workers. So, in the meantime, we’ll have to sit back and watch as governments respond to new developments. But make no mistake: the light at the end of the tunnel is blindingly bright.