Coronavirus' Big Impact On Utah's Small Businesses Won't End Soon
The economic impact of the coronavirus pandemic has shattered small businesses around the country.
Industries that relied most heavily on in-person customer interactions — such as food service, live entertainment and some retail — felt the pain early on, but those effects quickly spread throughout the economy. While the damage has been well-documented, recent data compiled by the U.S. Census Bureau last week provides a clearer glimpse of the extent of it.
Overall, Utah appears to have fared better than the national average, though it has still seen significant impacts.
About 40% of small businesses in the state reported a large negative impact, compared to 50% nationwide. Close to 66% of businesses reported major revenue falls and 75% requested financial assistance through the federal Paycheck Protection Program.
Utah has also seen record numbers of people seeking unemployment assistance. According to the latest numbers from the state’s Department of Workforce Services, at least 109,164 Utahns were out of work in early May.
Mark Knold, chief economist with the department, said it’s too early to tell what the long term effects of the pandemic will be, but the economy will almost certainly see some major shifts. That might mean more people work from home, or perhaps pave the way for seasonal stay-at-home mandates, such as during a winter inversion to limit commuting.
In general, Knold said the state can expect the damage to linger longest in rural areas, especially those that rely heavily on tourism or those, like the Uintah basin, that rely on oil production.
He also predicts those same industries that were hit earliest will also be the ones to suffer longest.
“Sitting next to people in a theater or restaurant — those are going to have their openings,” Knold said. “But it doesn't mean we're going to go flocking back.”
Harder to gauge, he said, is how many businesses will survive the disruption. One recent study from the National Bureau of Economic Research estimated that 2% of small businesses have already closed for good. Others project 42% of jobs lost during the pandemic won’t return.
DWS estimates 73% of those who filed for unemployment since mid-March are job attached — meaning they are expected to have a job to return to once the pandemic ends — but if those businesses close down for good, they would also be out of luck.
Going forward, the major question will be whether a second wave of the virus erupts, Knold said. That would likely force another round of shutdowns and layoffs, and could also mark the final blow to many of the state’s small businesses.
“Some restaurants or businesses that just hung on and survived this [first wave] would have a very hard time doing it again in such short order,” he said.
Knold predicts the economy won’t return to normal for at least a year, an assessment Federal Reserve Chairman Jerome Powell echoed last week. Until a vaccine emerges and people feel safe going out, he said businesses that rely on in-person interactions are going to stay vulnerable.
Jon Reed is a reporter for KUER. Follow him on Twitter @reedathonjon