As America continues suffering through the Covid-19 shutdown crisis, there are now clear signs of major negative effects occurring throughout the economy. Not only are jobs being lost, income down, but the service industry is being hit particularly hard.
The website Yelp has been tracking various businesses and services that appear on their website. It tracks both temporary and permanent closures of those businesses among other things. The results are issued in the Yelp Economic Average Report.
Mashable reports on Yelp’s findings:
It’s tough out there for restaurants and other small businesses.
Yelp’s Economic Average report out Wednesday shows exactly how tough: 60 percent of the 26,160 temporarily closed restaurants on the business review site as of July are now permanently shut. Temporary closures are dropping, and permanent shutdowns are increasing.
Yelp’s previous report in April found that more than 175,000 total businesses were closed in some capacity. Just under 25 percent of those closed businesses have reopened three months later. For restaurants in particular, this is becoming the way it goes. Yelp noted a 23-percent increase in permanent restaurant closures from only a month ago. Bars and clubs are also closing forever at high rates: 44 percent (as of July) of 5,454 temporarily shuttered bars and other nightlife establishments are shut for good.
These are huge percentages of restaurants that will never reopen again. Many of them had been well established for decades, but could not survive the Covid debacle. (As my son is quick to explain, restaurants cannot recover lost sales. Each day shut down is a forever totally lost day of sales and profits that cannot be made up.)
Companies that support restaurant operations are being equally affected. Without the restaurants, they have little or no income coming in. What does come in goes towards paying the bills and salaries of those employees left working. Unless new restaurants open, many of these companies will ultimately fail as well.
Small retail businesses are equally affected. More and more are reporting that they will never reopen again.
From Yelp again:
Many retail businesses shifted their operating models and started offering curbside pickup and online ordering, unfortunately those measures aren’t always enough to sustain their business long term. Shopping and retail businesses have endured 26,119 total business closures, of which 12,454 are permanent, representing 48% of closed retail businesses on Yelp. On June 15, we reported 27,663 closed retail and shopping businesses, of which only 9,640 were permanently closed. Since then we’ve seen 1,544 retail businesses reopen, however an even higher number have been forced to shut their doors permanently, accounting for 2,814 new permanent closures, a 29% increase in permanent retail closures in the last month.
Beauty services like salons and barbershops are no less similarly affected. With the shutdown, all salons had to close. Late June and early July, states were allowing them to slowly reopen, but with major restrictions. Now with shutdowns resuming, the salons are closing again. A second closure may finish them off completely.
As Yelp writes:
The beauty industry follows a similar trend as the retail industry with 13,609 total business closures, a decrease from 15,348 in June, as many businesses have been able to reopen their brick and mortar locations. However, the industry has suffered from 1,213 new permanent closures since June 15, totalling 4,897 permanent closures as of July 10.
Fitness centers, although a far smaller segment of the economy, have no less suffered than other services and retail sectors.
As of July 10, there have been 4,907 total fitness closures, a decrease of 682 closed businesses since June 15. However, of all closed fitness businesses 1,930 are permanently closed, representing 39% of closed fitness businesses on Yelp – 504 more permanent closures than in June.
As we go forward, there will be far more businesses to close, especially in those states that have opened up and then reenacted shutdowns a second time. There can just be no denying this fact.
If we are to get the economy started again, then there will need to be taken extraordinary steps taken once more and likely several more times.
This is not a time to be squimish about the National Debt. The unspoken truth is that it will never be repaid as it stands, and really does not matter anyway. More important is the Debt Service paid yearly. As long as it can be paid, there are no problems.
With any new actions taken, there will need to be plans that will:
- Ensure that the unemployed will have funds coming in to meet obligations and put food on the table. Without this, more and more people will be homeless and worse.
- For lower income people and those on fixed income, additional measures will be needed to ensure that they have enough money to meet obligations since costs will rise and income will stall.
- Small businesses will need better targeted programs and strategies to ensure that they can reopen and rehire lost employees.
- Major industries like the airlines and hospitality sectors must have some means where they can survive though the Crisis and beyond.
- Healthcare must be looked and programs developed to cover those who have lost their jobs and have no ability to pay for insurance.
- There must be a way to ensure that mortgages and rents can be paid to avoid people losing homes and being evicted.
America is in “uncharted” waters with this new Depression that we are facing. Ninety years ago, we were a far smaller population country with a major rural presence. The big cities were not near the population centers that they are now.
Today, America is mostly urban in nature. People who live in urban centers do not have the options of the rural Americans. They are highly dependent upon food supply chains, accessible health care and other needs. It must be through this lens that we must look at what is to come and how we can muddle through the next decade.
As always, thank you Mark and all the others for allowing me to post my thoughts and opinions. And thank you to all the cementers who read my posts.
Hope everyone finds this post informative at the very least, even though it is filled with doom and gloom.
And whatever you do, don’t forget….
LIFE IS GOOD! (As long as we have family and each other.)