Coronavirus

Economic Crisis Deepens as Business Closures and Unemployment Claims Rise

Data from Yelp shows that the long-term economic toll of the coronavirus pandemic is only starting to be realized. And federal unemployment data shows layoffs are climbing again.

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Speaking from the White House on Tuesday evening, President Donald Trump warned a pandemic-weary nation that the COVID-19 crisis will "probably, unfortunately, get worse before it gets better."

The president was speaking about the public health aspect of the coronavirus pandemic, but the same warning might as well apply to the U.S. economy.

Indeed, just a few hours earlier and a few blocks away from the White House, the owners of a well-known Washington watering hole, Maddy's Tap Room, announced that they could fight the good fight no longer.

"We tried, but the economic impact was just too much," the bar's owners posted on Facebook.

Maddy's is hardly alone. New data released by Yelp, through which customers can review local businesses, shows that permanent business closures is on the rise nationwide, even as consumer activity continues to slowly increase. The Wall Street Journal reported Thursday that small businesses are bracing for a prolonged crisis. Even big businesses like airlines are now making further cuts, having already pared back services considerably when the pandemic first arrived.

Unsurprisingly, restaurants have been the hardest hit. Since March 1, Yelp's report shows 26,160 total restaurant closures nationwide. About 60 percent of those closures are permanent.

Restaurants come and go all the time, of course, but pandemic-related closures are not exactly typical creative destruction. First, many establishments were forced to close by government fiat. Weeks later, they reopened, but with restrictions on how and where patrons could be served. Many places, including Washington, D.C., abolished nonsensical restrictions on selling alcoholic drinks to-go in order to give bars a possible lifeline while indoor service was reduced or banned. Expansion of outdoor seating was another temporarily workable solution during late spring and early summer.

But, ultimately, there's no substitute for a packed house on a Friday night—and that's simply not realistic right now, for reasons that have to do as much with regulations as with the choices of individual consumers.

Overall, Yelp reports an uptick in permanent shuttering relative to temporary ones. In its last economic report, released in April, Yelp found more than 175,000 total businesses were temporarily closed. Since then, less than 25 percent have reopened.

The fact that businesses continue to close even as many states are lifting their stay-at-home orders indicates the depth of our economic crisis. When you consider that the lockdowns during March and April were mostly voluntary and that no government official can re-open the economy simply by declaring it no longer closed, it now seems pretty clear that consumer behavior will remain cautious (and economic activity suppressed) until COVID-19 is contained.

"Many businesses that eagerly reopened doors in June were forced to scale back operations and in some cases even shut down again—a costly action for many small businesses," the Yelp economic report notes.

Federal assistance for small businesses, like the Paycheck Protection Program (PPP), may have staunched some of the initial bleeding. The PPP has pumped more than $500 billion in forgivable loans into businesses so they can keep furloughed workers on payroll, but the program has been beset by problems. The initial round of $300 billion was exhausted almost immediately, in part because loans were secured by businesses not intended to be recipients—including businesses owned by lobbyists and Trump's family. Businesses have complained that the process for getting loans is slow and the approving parties unresponsive. As it turns out, you can't expect bureaucrats in Washington to be effective substitutes for the billions of daily transactions that keep the economy working.

If the crisis drags on and more businesses are forced to close their doors permanently, those loans may end up having merely flattened the curve—to borrow a phrase from the public health aspect of the crisis—of job losses.

But it may not have even done that. On Thursday, the Department of Labor announced that there were 1.4 million initial unemployment filings during the past week. That's the 18th straight week with at least 1 million requests for unemployment benefits, and a number that suggests layoffs are beginning to climb again.

How bad could it get? The Partnership for New York City, a civic group, estimates that roughly 77,000 New Yock City businesses will close before the pandemic ends. That's about one-third of all employers in the city.

The only way to reopen the economy is for most people to feel safe going out to restaurants and stores again. That won't happen—at least not on a large enough scale for small-margin businesses to survive—until the number of coronavirus cases and deaths start falling.

It's a vicious cycle for the country and a death spiral for many businesses.

NEXT: Boulder Refuses To Lift the Cap on Unrelated People Living Together. Housing Advocates Plan To Sue the City.

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  1. If you liked the Great Depression of the 30s, the flu pandemic of 100 years ago, and the riots of the 1960s you will love Trump’s America of 2020.

    (Attributed to many)

    1. Your heart is in the right place with this one, Mr. Buttplug, but I’m afraid your messaging is flawed.

      Remember, our position is that these are mostly peaceful protests — not riots.

      1. ” these are mostly peaceful protests — not riots.”

        There’s a difference?

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    2. Mostly attributed to the lefty ignoramus turd.

      1. Fuck you Sevo! I see you haven’t found that tall bridge to jump off of yet. Go crawl back in your self-serving shithole!

        1. Fuck off and die, slaver. Make the world a better place and your family proud.

          1. So we’re still friends? I hope!

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  2. The PPP has pumped more than $500 billion in forgivable loans into businesses

    The King of Debt Con Man invents a “forgivable loan” with my tax money.

    1. I’m sure you pay taxes like you pay bets.

      1. Well, he would, if he had an income.

  3. “the long-term economic toll of the coronavirus pandemic”

    Yet another example of Reason’s shitty writers.
    The Corona Virus has an insignificant economic toll.
    The knee jerk panic tyranny on the other hand….

    1. Exactly. And unemployment is rising again because governors are losing their shit and shutting down the economy again. This isn’t just “bad luck”. It didn’t just happen. This is the result of specific actions taken by governors for the purpose of creating exactly this effect.

      That is the story here. The story is not “pandemic takes economic toll”. The story is tyrannical governors creating mass unemployment and poverty in the name of “public health”.

      This has been the biggest violation of American civil rights since chattel slavery and reason seems to be okay with it.

      1. “The biggest violation of American civil rights since chattel slavery.’

        Never stop Johning, John.

        I wonder, were the quarantines during the Spanish flu pandemic also like chattel slavery? They must have been less restrictive, right, since the Covid quarantine is, as you say, the worst thing since slavery. Wearing a mask is indeed practically like being tied to a tree and whipped until you bleed out.

        Americans were not going out and buying shit because they were afraid to get sick. Turns out mass death can have a negative effect on the economy. And then your dear leader decided to open the country up, and while some people stayed inside, others assumed this meant there was less danger. They were wrong.

        The pandemic caused the economic problem, just as might be expected with anyone not trying to make pathetic desperate excuses for an incompetent president who EVERYONE on the goddamn planet can see fucked this up more than anything has been fucked up before.

        1. They quarantined sick people during the Spanish flu. They did not lock healthy people in their homes, which is what we are doing now. This is not a quarantine. A quarantine involves people who are known to be sick.

          They didn’t do what we are doing because they understood the limits of government and that it wouldn’t do any good.

          And yes, making it illegal to work or leave your home causes a huge hit on the economy. A much bigger hit than the virus would have. The proof of that is how the economy was recovering before the Democratic governors reimposed the lock downs.

          And you have no concept of what rights mean. You just know what you want and think anything you like is a right. You are not smart enough to even have a conversation with.

      2. It does seem Reason is in agreement here,OH Dear!
        Even the headline that lured me in was dead wrong-the
        Wuhan Flu did nothing to the economy-our government.

    2. But that’s not true, nor is it even coherent.

      Oh wait you’re trying to figure out why Trump isn’t to blame for this.

      Watching the slow death of libertarianism should have been more pleasurable than it turned out to be.

  4. Who knew this was the way we’d finally get Democratic socialism? Just turn off the economy. Voila!

  5. Couldn’t even get through one writeup on the economy without throwing in a TDS line could you?

    And blame the democratic governors and mayors for this fiasco – they have been the ones pumping up the fear volume.

    Remember that at each election – your state and local government bears the blame for your job loss, or business closure.

  6. So, you’re telling me that forcibly closing businesses and instituting rules that mean you take a loss even by being open is bad for business?

    Where did you go to economics school, and do you have a newsletter?

  7. Any competent Koch-funded economist will tell you that when unemployment rises sharply, two steps must be taken:

    (1) Allow unlimited, unrestricted immigration.
    (2) Abolish the minimum wage.

    Fortunately the Democratic Party has embraced our way of thinking on the first point, so we’ll have open borders when Biden takes over in January. I’m confident we can convince him to implement the other half of the Koch / Reason dream and set the minimum wage at $0.00 / hour as well.

    #OpenBordersWillFixEverything

    1. I’m confident we can convince him to implement the other half of the Koch / Reason dream and set the minimum wage at $0.00 / hour as well.

      OK, this one was pretty funny. 8/10

    2. I’d say that everyone— from Mr. Koch on down— is coming to the realization that Democrats are better at running things things than the last two Republicans in the WH. Why should I and Mr. Koch have our livelihoods impeded by a bunch of inbred pro-lifers from Kentuckistan. Let them wallow in their own chicken shit, right?

      1. “I’d say that everyone— from Mr. Koch on down— is coming to the realization that Democrats are better at running things things than the last two Republicans in the WH.”

        That’s because you’re a fucking lefty ignoramus.
        That guy Newsom has done a wonderful job of running the CA economy right into the ground.

    3. I believe you meant to write minimum wage at $15.00/hour.

  8. >>>First, many establishments were forced to close by

    (D). Orange man bad.

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  10. Our country and economy ate being held hostage by political terrorists in the government/media complex, and it’s mostly liberal democrats at the state and local levels holding the guns to our heads.

    Mister President, don’t give in to these political terrorists again. Tell them to open the fucking economy and release us hostages or they will get absolutely nothing, and can fend for themselves.

    If you do anything else, if you give in again, they will never release us and will keep doing this to you (and us) again and again and again.

    1. I am starting to think this is never going to end. The local officials are too drunk with power. Their imbecile supporters two drunk on virtue signaling and blaming the other.

      I used to think that this nonsense was going to end after the election especially if Biden won. Now, I am not so sure. I think it might go on forever. If they win the election, why bother to re-open the economy and give up all that power if they just won an election with it? Also, the Democrats hate the rest of the country. Most of them get real pleasure watching people they see as the “other” suffer. And the lock downs are doing that in spades.

      1. I’ve been thinking the same thing.

        Especially regarding the protests. I doubt they would be happening if people hadn’t been put out of work. People would have better things to do. These protests are especially beneficial to the political left. It is to their political advantage to keep people out of work and deepen the depression because it means more votes for the far left fringe. What do you think?

      2. >>why bother to re-open the economy and give up all that power if they just won an election with it?

        they won’t. they won’t win, either.

      3. They will keep dangling the carrot of a promise of a return to normalcy after everyone gets the vaccine, which will never happen. Either a decent vaccine will never materialize or everyone wont get vaccinated. Oh dear! Welcome to your new normal citizens.

        1. I think there will be a vaccine. But no vaccine is 100% effective. That will be the next thing they hang their hats on. I keep thinking people will demand their lives back. And they are starting to. But I am terrified at how so many people are so willing to give up their rights and live in a police state the likes of which has never been seen in this country.

          1. “…But I am terrified at how so many people are so willing to give up their rights and live in a police state the likes of which has never been seen in this country.”

            If it saves just one life!

  11. Hold up. You’re claiming that if you make it illegal to go to work, businesses will close?

    Somebody alert our “leaders”!

  12. Data from Yelp shows that the long-term economic toll of governments’ reaction to the coronavirus pandemic is only starting to be realized. And federal unemployment data shows layoffs are climbing again.

    ftfy

  13. The business shutdowns would come to a fast end if those working weren’t allowed to draw their pay until restrictions were lifted. I’m betting a lot of highly paid media pundits would change their tune on quarantines in a heartbeat.

  14. The initial round of $300 billion was exhausted almost immediately, in part because loans were secured by businesses not intended to be recipients—including businesses owned by lobbyists and Trump’s family.

    WTF? So Trump-related businesses should not take advantage of legally-accessible government programs because…intentions?

    Should those business also not take every tax break possible because, I dunno, Orange Man Bad?

    This stupid website really pisses me off.

    1. It’s Buhm. He has… limitations.

  15. Am I the only one who is realizing the spambots are making more sense than the “articles”?

    1. I make money working from home, and you can too! Just get a STEM degree and apply to a shitload of jobs! It’s that easy!

      1. I mean, in at least some fairness this is what economists actually seem to believe. There is essentially zero consideration of the feasibility of a trucker becoming a robotics technician, and economically speaking they think it should even out after a generation or two.

        Not a great selling point, of course, to the trucker of today.

        1. What are you talking about? Truckers can make a pretty decent living.

        2. Hey now, as a truck driver who is also a welder, machinist, EMT and computer programmer, I resemble this remark.

          Though, admittedly, many of my fellow operators do not.

        3. Bingo. Economists have what can best be described as a Marxist philosophy whereby culture, personal choices and aptitudes do not matter. Everyone is a interchangeable unit of labor in much the same way Marx viewed everyone as a interchangeable part of the world proletariat.

          That is of course insane. If a mad dictator took over the nation an instituted a centralized economic planning system whereby every egg head at places like CATO and Heritage were told to change careers and become welders and truckers, the eggheads would have a stroke and see such a plan for the insanity that it is. Yet, those eggheads advocate for economic policies that are based on the assumption that welders and truckers can seamlessly become service industry eggheads and see no problem with that.

          1. I see plenty of economists acknowledge that not everyone can simply snap their fingers and start a new profession. Statements like “People will shift from doing X to doing Y” are talking long term, not immediate.

  16. “Data from Yelp shows that the long-term economic toll of the coronavirus pandemic is only starting to be realized.”

    No, it’s not caused by the virus, it’s caused by the governments’ PANIC and unconstitutional power grabs

    1. And we realized it the day the edicts began.

  17. I’m sure Yelp contributed to closures as well. We all remember this little tidbit from back in the day.
    https://youtu.be/pDlR_ccnZww

    1. That’s because you’re a fucking lefty ignoramus.

      1. Funny Sevo! You have me pegged all wrong.

  18. Recessions are like time machines. Mostly, they don’t make things happen that wouldn’t have happened eventually anyway. They just make things happen more quickly.

    The transition of brick and mortar retailers to online, the transition of restaurants to online ordering and sharing economy delivery, the transition from office workers to working at home–all of this was already happening. This recession is just accelerating those processes.

    In the last recession, it was necessary to for more homeowners to become renters because they bought more home than they could afford, and the recession just accelerated that process. Trying to keep homeowners in their homes was trying to hold back the force of time. Millions of people lost their homes and hundreds of banks went out of business anyway. That’s what needed to happen, and squandering productive resources to stop the unstoppable forces of creative destruction is futile.

    “The PPP has pumped more than $500 billion in forgivable loans into businesses so they can keep furloughed workers on payroll, but the program has been beset by problems. The initial round of $300 billion was exhausted almost immediately, in part because loans were secured by businesses not intended to be recipients—including businesses owned by lobbyists and Trump’s family.

    The problem with these programs isn’t that they’re helping unintended beneficiaries, lobbyists, or Trump’s family. The problem with these programs, like TARP, is that they’re spending money to try to stop the future from happening–as if bailing out a buggy whip manufacturer were about to make us all go back to using horses again.

    In the future, more brick and mortar retailers will need to move online to survive. Restaurants will need to deliver profitably to survive. Office workers will need to move to places where the rent and house payments are low enough that companies can afford to hire them to work from home. And none of that depends on whether the bailouts went to Trump’s family, lobbyists, or unintended businesses. Those trends will still devastate anyone who doesn’t adapt anyway.

    1. “…Restaurants will need to deliver profitably to survive…”

      Your brush is entire too wide; restaurants provide a lot in addition to food, as do many other brick and mortar operations which will be put out of business by this government meddling.
      This is not ‘creative destruction’; this is government-mandated poverty for a lot of folks.

      1. >>government-mandated poverty

        “we tried to fake global warming for 30 years and nothing. let’s try to fake a global pandemic and see what happens”

      2. “…Restaurants will need to deliver profitably to survive…”

        Your brush is entire too wide; restaurants provide a lot in addition to food…

        Just what I was thinking. When I go out to eat, I get a chance to- well, go out. The restaurant brings my meal to the table, I eat and leave.

        Delivery? So I get a bag of food handed to me at the door, hopefully still a little bit warm. Put it on plates, eat, and then do dishes. Since I’m doing everything else, I might as well cook the food myself and save 50% (or more) on the cost of the meal.

      3. There are still people rockin’ horse and buggy. I’ve seen ’em in Pennsylvania. But in the future, more restaurants will be doing more delivery and doing it profitably. Those who can’t manage that will have a tough go competing, especially if the lunch crowds are working from home in the future rather than congregating in physical offices. There will still be sit down restaurants in the future. And some people still ride horse and buggy.

  19. So, how do yall plan to explain to the children of 2040 why it is that they must wear masks all the time? Will they even question it, since they’ll have been wearing masks their entire lives?

    1. After growing up with online public education, will they understand the explanation?

    2. My kids’ school sent out their Draconian back to school plan and first it says, “Explain why we are all wearing masks and how helpful the masks are to protect all of us. ” I don’t know how to explain it in 2020.

      It also mentions drop off and pick up and says parents should stay in their cars and wear masks. I told my ten-year old this and she gave me a kid’s version of WTF?

  20. “The only way to reopen the economy is for most people to feel safe going out to restaurants and stores again. That won’t happen—at least not on a large enough scale for small-margin businesses to survive—until the number of coronavirus cases and deaths start falling.”

    I am not afraid of the Coronavirus. And I am beyond sick of raw numbers. Worst case scenario I’ve seen is a 0.5% mortality rate. If you won’t leave your home and have dinner and a beer at a bar because there is a chance you could catch a virus that you have a 99.5% chance of surviving, you are agoraphobic. Please don’t drive, or ride a plane, or consume processed food. Don’t eat too much. Wash your hands every 15 minutes.

    Seriously – who wants to live this way? It’s not living. It’s merely existing.

    The real problem with the “until case numbers start falling” approach is that every time we lock down, case numbers will fall. Then we will open back up. Case numbers will rise. So we shut down again and case numbers go down again so we open again so case numbers go up again so we shut down again ad infinitum.

    Human arrogance writ large is the issue here. We think our government or our social norms can defeat a virus. We don’t have that kind of power. You are born, you pay your money and you take your chances. Being alive is at least as important as avoiding death. There is no risk-free existence.

    The fact that I have made all of these points before is the most depressing thing I’ve got going right now. Nobody with any power will admit that we cannot control nature. We can take steps to mitigate damage (think seat belts), but at what point am I responsible for the health of another? If you have comorbidities, isn’t it on you to take the extra precautions?

    Also, if we don’t even believe masks reduce transmission by 70%, why are we all wearing them like they are some kind of panacea? Doesn’t anyone else see that we are merely delaying the inevitable?

    We can’t even have a civil discussion about a damn virus. Even the writers at Reason think we can control nature. Nobody seems to give a single fuck about quality of life.

    I give up.

    1. “I am not afraid of the Coronavirus. And I am beyond sick of raw numbers. Worst case scenario I’ve seen is a 0.5% mortality rate. If you won’t leave your home and have dinner and a beer at a bar because there is a chance you could catch a virus that you have a 99.5% chance of surviving, you are agoraphobic. Please don’t drive, or ride a plane, or consume processed food. Don’t eat too much. Wash your hands every 15 minutes.”

      We have turned over control of our lives and our economy to the government as a result of a bug which has yet to kill 1/10th of 1/2 of 1% of our population.

      1. Yep! Also, it’s been a LONG time since I have seen any reporting on hospital capacity. I assume this means hospitals overall are not drowning in COVID cases.

        Being born is a death sentence. I hate to go all Braveheart here, but every person dies; not every person truly lives.

        I want to be fully alive. I can’t. Because of this sad little virus that most people never even know they have.

        1. “Yep! Also, it’s been a LONG time since I have seen any reporting on hospital capacity. I assume this means hospitals overall are not drowning in COVID cases.”

          Heard a report that LA is running out of ICU beds.
          Well, care to be more specific? Which hospitals, and how many of those beds are occupied by those who couldn’t get care earlier courtesy of Newsom’s PANIC!!!!
          At least some of us are embarrassed by the dog’s breakfast the governments have made of this.

          1. The “running out of ICU beds” meme was never worth listening to. Even in normal times hospital ICUs run at near capacity. They know how many people need ICU on average and they build and expand ICU wards with that planned capacity in mind in the same way that your local Denny’s doesn’t build a dining room with 5000 seats.

            The real crime has been how hospitals have been rejecting people who need ICU care out of ICUs to make room for nonexistent covid cases.

        2. Even if you’re lucky enough to be able to catch the disease and not develop symptoms, you can still give it to other people. Am I supposed to take your word that you’ll stay away from my mom and grandmother?

          “Everyone eventually dies” is not, as you may guess, a very compelling argument for anything. Can I use it to justify enslaving the entire human race? They’re all gonna die anyway.

          1. I’d be content just to enslave you, but I actually doubt I’d gain much profit from doing so (even with your complete cooperation).

            1. You never know until you try, sweet cheeks.

          2. Wow – too many logical fallicies to count.

            I have no desire to go anywhere near your mother or grandmother, so yes, you have my word. Why, were they planning to walk up to me at Target and try to breathe in my face?

            Going from everyone dies (fact) to enslaving the population skips about 40 steps. Did you notice my emphasis on quality of life?

    2. Human arrogance like thinking your back-of-the-napkin thoughts are more informed than the world’s medical experts?

      You can’t lie your way through this one since we have models for countries that did it right. We did it wrong, almost exclusively because the guy at the top was too arrogant to listen to scientists.

      1. You are an exhausting human being. I’m not going to waste any more time on you.

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  22. Some perspective: the “surge” of positive tests (i.e. “cases”) of Coronavirus in Texas:

    363,615 confirmed positive tests = 1.25% of the entire population of Texas.

    4,384 deaths attributed to COVID in Texas = 0.015% of the entire population of Texas.

    For this we have irrevocably changed the world as we know it.

    1. don’t forget to account for the lies.

    2. In Idaho, there have been 114 confirmed deaths in a population of 1.75 million. I didn’t run it through a calculator but I bet there’ll be a string of zeroes immediately to the right of the decimal point.

      1. Yet federal goons need to be sent in over some graffiti?

        1. They are being sent to protect federal property.

      2. You don’t have a calculator? A mind?

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