New Data Shows Main Street Businesses Rebuilding for Post-Pandemic Economy

With 130,000 permanent closures in 2020, small- to mid-sized businesses (SMBs) suffered economic impacts early on in the pandemic. Today, the SMBs that typically drive economic growth in small towns and cities across the United States continue to face headwinds such as emergent inflationary pressures, labor shortages and supply chain bottlenecks. Despite these hurdles, the Q1 2022 Main Street Index, which measures the health of SMBs, clocked in 19% above its lowest point during the worst days of the pandemic.

All is not rosy on Main Street, however. Three key Main Street Index sectors — fitness, retail and restaurants — have not yet fully recovered. Mounting wage pressure, social distancing requirements and lingering pandemic fears still impact these sectors, with the Main Street Index scores for fitness establishments being 3.4% below pre-pandemic levels. Retail and restaurant scores stand 1.8% and 1.3% below pre-pandemic levels, respectively.

These are just some of the findings PYMNTS uncovered in “The Main Street Index: How America’s Small To Mid-Sized Businesses Are Rebuilding For A Post-Pandemic Economy,” powered by Melio. This report provides a quarterly metric measuring the health of the typical small businesses that line Main Street, U.S.A. Drawn from more than 2.5 million data records on how SMBs fared during the past 18 months, this second quarterly edition examines the trajectory of Main Street SMBs’ recovery.

More key findings from the index include:

• After experiencing slow growth in past quarters, Main Street SMB performance has risen to pre-pandemic levels, reaching an all-time high score of 134.7. The Main Street Index experienced its steepest decline in the early days of the pandemic, dropping more than 10%, from 126.8 in Q1 2020 to 113.7 in Q2 2020, then recovered its pre-pandemic level in the two quarters following the pandemic’s onset. After this quick recovery, however, growth slowed significantly and consolidated during the last few quarters. Finally, in Q1 2022, growth has returned solidly to pre-pandemic trends. At 134.7, The Main Street Index score is now 19% above its Q2 2020 score — its lowest one.

• Although all regions’ scores have surpassed pre-pandemic levels, the Mountain region’s Main Street Index score is 11% higher than its pre-pandemic level, outpacing other regions. The Northeast has been the weakest performer so far this year. At 9.4%, the Mountain region experienced the most significant year-over-year Main Street Index increase: It now stands at 11% above its pre-pandemic level. The Northeast registered the most rapid recovery from the pandemic, however, the region’s compound annual growth rate (CAGR) of 3.3% is the worst performer so far this year.

• Both the Main Street Index and the U.S. GDP have rebounded from the pandemic, but the Main Street Index’s expansion rate of 6.3% for Q1 2022 far outpaces the 1.8% GDP increase expected for the overall economy that quarter. Main Street SMBs are also outperforming other businesses in the same sectors. Main Street SMBs’ economic performances have been remarkable compared to the overall economy and the industry sectors to which they belong. Although the initial fall in the Main Street Index score was steepest for Main Street SMBs during the pandemic, the index shows that Main Street SMB health has reached higher levels than the index score for other businesses in the same 10 industry sectors, with its annualized growth in Q1 2022 reaching 6.3% compared to 3.6% for the U.S. index.

To learn more about how America’s small- to mid-sized businesses are rebuilding for a post-pandemic economy, download the index.