These are the kinds of records that no one wants to see broken.
And yet, as the coronavirus pandemic keeps decimating businesses, particularly smaller ones, these are the records — tied to unemployment claims and the ranks of jobless individuals — that may be poised to topple, like dominoes, with each successive report.
On Thursday (April 2), the steep drop in the labor market got steeper as the U.S. Department of Labor reported that the number of individuals in the U.S. filing for unemployment soared to 6.6 million for the week that ended March 28. That’s a record, and far outpaces the consensus expectations for 3.8 million claims. The prior week’s claims tally was boosted to 3.3 million, up from 3.28 million.
The previous record was 695,000 claims — and was minted in 1982.
As time goes on it may be the case that historical, weekly data tied to jobless claims gets ratcheted up, due in part to the backlog that must be processed, and as state unemployment offices are, for lack of a better word, swamped.
The Labor Department data underscore the fact that smaller firms are having trouble keeping their doors open. In a report published Thursday (April 2) by PYMNTS titled “Main Street on Lockdown,” we surveyed more than 200 small and medium-sized business (SMB) owners March 24 to gain a sense of how drastically the landscape had, and has, changed as COVID-19 withers consumer demand, and wreaks havoc on the economy.
Time is of the Essence
The average business owner we queried said it will take 178 days for their local economy to emerge from the rubble of the pandemic. In other words, it will take time.
And time is one of the things in shortest supply. The other precious commodity in short supply is cash. These firms, we found, have enough cash to get them through the next 20 days — anything needed after that will be accessed by dipping into personal lines of credit or investment portfolios. To get a bit granular, 49.1 percent of the firms responding to the PYMNTS survey said they could use credit cards to keep operations afloat; 25.5 percent said they would be able to liquidate investments. Another 12.7 percent said they might be able to take out mortgages on their house.
All of these are stopgap measures, of a sort, because resources are finite.
And, increasingly, as those resources are tapped, the ultimate measures may snowball: The first line of defense is seemingly — for those firms able to maintain some top line — to shorten workers’ hours without laying them off. Our survey noted that roughly 28 percent of SMBs are asking their staff to work fewer hours; another 23 percent have started to lay people off, which of course feeds into the jobless claims reported on a nationwide basis. Because 89 percent of the companies we surveyed expect to generate lower revenues this year than they saw in 2019, which points the way toward further belt-tightening among those that survive the coronavirus pandemic as viable businesses.
As for survival itself — the ability to continue in what in the business world is referred to as a “going concern” — the outlook is far from certain. Our analysis found that 58.4 percent of SMBs see at least some risk of closing up shop before the pandemic is over. Of that tally, 25.8 percent are sure that they will not survive. That certainty, of the most dismal sort, is clustered among smaller technology firms, at nearly 47 percent, followed by manufacturing at more than 38 percent.
As for the government, or financial services firms as cavalry scenario, time is of the essence, too. We found that 54.2 percent of SMB owners who had asked the government for assistance, and roughly 64 percent of firms who had asked lenders for assistance, had received requested funding as of March 24.
The data are sobering, and even if a rebound, or rebirth lies ahead at some point in the future … the nadir may be some ways off.