The pandemic has dealt a particularly large blow to smaller businesses, to women and minority-owned businesses, and to sectors such as entertainment, lodging and retail.
Those are some of the findings of a May survey of nearly 1,100 businesses across Minnesota and in neighboring states conducted by the Federal Reserve Bank of Minneapolis.
“The main takeaway is that COVID effects have been very wide and very deep and negative, but there’s also variation across those groups,” Ron Wirtz, regional outreach director, said during a webinar Tuesday on the impact of the pandemic on the economy.
He noted that many of the traditional measures of the economy, such as gross domestic product and monthly unemployment numbers, have a lag to them of anywhere from a month to six months and have not been able to keep up with the fast-changing nature of the COVID economy.
“During this time of really volatile labor markets, we’re in a spot where we are trying to feel in the dark a little bit for what’s happening,” he said.
To help fill in the gaps, the Minneapolis Fed has been ramping up its surveying and outreach to businesses across the Upper Midwest to get a better pulse on the situation. While the surveys are not a scientific sample, they provide a good snapshot of the economy.
The May survey showed, for example, that larger firms have fared better than smaller ones. About 70% of sole proprietor businesses had their revenue cut in half, or worse, compared to 25% of larger firms.
“Now 25% is still a dramatic number,” Wirtz said. “If you don’t know anything else, that’s a catastrophic number for the economy. But unfortunately, the smaller firms have seen even more negative impacts.”
Women and minority-owned businesses, which tend to be smaller and in harder-hit sectors such as food and retail, also saw steeper revenue declines compared to their counterparts.
Data from the Minnesota Department of Employment and Economic Development shows that job losses during the pandemic have disproportionately impacted women and people of color. These kinds of disparities, unfortunately, are not unusual, Wirtz said.
“We’ve seen these patterns in the past,” he said. “I feel like maybe we’re finally ready now to look at the data honestly since the murder of George Floyd and the social unrest in Minneapolis. Maybe now we’re ready to stop accepting the fact that there are lopsided and racist distributional effects when the economy falters.”
In addition to its stepped-up survey work, the Minneapolis Fed has also created a dashboard on its website that shows how the pandemic is affecting the economy. It includes changes in restaurant dining volume from Open Table, auto traffic volume from the Minnesota Department of Transportation, and travel numbers from the Transportation Security Administration.
“What we’re trying to do is get better data that helps us to track not what happened last month or two months ago, but what happened last week or even yesterday,” he said.
©2020 Star Tribune (Minneapolis)