Harker said the impact could be twofold in its damage.
“There’s both the direct economic impact of businesses having to close down,” Harker said during a webinar organized by the Fed, as reported by Reuters. “But I also worry about the psychological impact on consumer confidence.”
Harker's words come after Federal Reserve Governor Lael Brainard's recent speech, which predicted that the rise in cases foreshadowed a difficult recovery. Brainard said the economy's apparent well-being in June was mostly artificial, stemming from the efforts from the government such as the CARES Act to keep the economy afloat during the lockdown period.
Brainard posited that the economy would instead continue to fluctuate, based on how the virus was progressing, with some industries doing better or worse than others.
Many small businesses are at a dire, very real risk due to the pandemic, PYMNTS also reported recently, with some finding it impossible to keep up with multiple new state-mandated closures of establishments like bars. While it was difficult enough to cope with the first round of closures, federally-granted Paycheck Protection Program funding was doable for some businesses as they watched their spending.
But in some cases, as in that of Texas-based Krank It Karaoke owner Mick Larkin, it won't be enough — Larkin had readied himself for the “new normal” of periodic disinfecting and social distancing, including purchasing masks and hand sanitizer for guests without them. But that same day, Texas Gov. Greg Abbott abruptly ordered the closures of all bars to help stem the virus, so Larkin made the decision to permanently close his club, absent of other options.
Larkin wasn't alone in that — Harvard University researchers estimated that around 110,000 small U.S. businesses closed forever between March and May due to the pandemic's shutdowns.