At the end of 2019, there was a quiet sense of economic optimism in the air.
The American economy had expanded by a greater than expected 2.1 percent, bringing overall growth for the year to a respectable (albeit unspectacular) 2.3 percent. While it may have been the lowest GDP expansion seen during the Trump administration, the foundation had been laid for what conceivably could have been a successful election year in 2020.
This was, of course, before the coronavirus pandemic arrived. Fast-forward into 2021, and the landscape looks entirely different to what was being forecasted by analysts at the back end of 2019.
While some economists warned that a recession was overdue following more than a decade of successive growth years since the financial crash of 2007-’09, nobody could have foreseen what has been the biggest blow to the U.S. economy since the Great Depression of the 1930s.
And the figures, whichever way you analyze them, do make for depressing reading.
Around the time of writing, nearly 500,000 people had died either with or because of COVID-19, with slightly more than 28 million cases recorded, making the United States one of—if not the most—devasted countries to be hit by the virus.
It has been a public health crisis of astounding scale, one which is, thankfully, being addressed with a series of vaccinations that is a feat of human ingenuity and endeavor given how rapidly they have been developed, tested and approved by medical authorities.
But while there is light at the end of the tunnel in this regard, attention will soon turn more squarely to the monumental economic fallout that the events of 2020 have created.
As nations across the world responded and took steps to protect their populations, a trail of financial destruction inevitably followed. Economies have ground to a halt as localized and nationwide lockdowns have greatly limited the means by which the world’s workforce can move and keep the economic wheels turning. Certainty, the one thing businesses and investors crave, has been diminished.
The exact amount of economic damage caused by COVID-19 is mightily difficult to predict accurately, but the headline figures which have come out of various analytical houses during the course of last year are stark.
In July 2020, for example, the World Economic Forum (WEF) reported a GDP contraction at an annualized rate of 32.9 percent, the deepest decline since records began just after the end of World War II. The WEF also confirmed that more than 30 million Americans were receiving unemployment support at the time.
More recently, in December 2020, the University of Southern California published a study that calculated possible losses in real GDP of between $3.2 trillion and $4.8 trillion over the course of just two years. This depends on a range of variables, including the extent and duration of business closures, how quickly areas open up, infection rates and fatalities, and consumer appetite to spend.
Much of the United States’ overall recovery will depend on the support provided and actions taken from state to state, areas which have adopted drastically different levels of measures in response to the public health threat.
From California to Florida, interventions have varied markedly, but there is no denying that every corner of the country is facing a battle to emerge from the other side of the economic troubles that lie ahead.
So, against a nationwide backdrop of unwanted broken records, how have responses to these challenges been coordinated at a localized level? We start in the Upper Midwest.
Josh Hundt, the chief Business Development officer and executive vice president with the Michigan Economic Development Corporation (MEDC), witnessed first-hand the devastating impact caused by the coronavirus.
“It comes as no surprise that as the global pandemic spread across the country last spring, industries and businesses felt an immediate impact to production and revenues streams,” Hundt says. “In Michigan, one of the state’s hardest hit in the early days of COVID-19, the manufacturing of PPE and life sciences equipment became essential services seemingly overnight.
“In the face of this adversity, Michigan’s Arsenal of Innovation was set in motion with manufacturers retooling their production lines to support the frontlines and create new revenue streams in uncertain economic times.”
MEDC responded in kind by immediately launching the COVID-19 Emergency Access and Retooling Grants through its Pure Michigan Business Connect program. In total, 12 businesses received retooling grants and produced 2.5 million units of PPE in a matter of months, generating $27 million in new sales, vital revenue to support their workforces and viability of operations.
“As our manufacturers pivoted, small businesses all across the state faced unprecedented challenges as a result of the necessary steps to slow the spread of the virus, and overall changes in consumer behavior in the pandemic,” Hundt continues. “Again, the MEDC stepped in to help provide more than $240 million in relief over the past year to help our small businesses weather the economic storm and keep their workers employed.”
In total, 23 relief programs have provided support to more than 24,400 companies in Michigan and helped to retain 200,000 jobs. Hundt and the MEDC were also aware of the hardships endured by minority-owned businesses, issuing more than 9,000 awards to minority-owned, women-owned or veteran-owned business statewide.
“In all corners of the state and across all industries, Michiganders have joined together to find innovative ways to use every resource available to fight this virus,” he says. “As we begin to look toward long-term recovery efforts, the MEDC and the state of Michigan remain committed to ensuring Michigan businesses of all kinds have the resources and opportunities to survive, succeed and grow here.”
The Southwest state of New Mexico recorded a rate of 171 COVID-19 fatalities per 100,000 people as of Feb. 19.
New Mexico has adopted a county-by-county, three-level restriction system (red, yellow and green), which details numerous measures surrounding retail, food and drink establishments, gatherings and more. Brought in at the start of December, the tiered approach is designed to enable maximum flexibility in a bid to restart New Mexico’s economy.
Impetus is needed if August 2020 figures are anything to go by. At that time, more than 97,000 residents were in receipt of unemployment benefits, this after more than 250,000 new benefit claims were made in the five prior months.
Around 30 companies in the state had declared bankruptcy, with four in 10 restaurants temporarily closed and 3 percent closed permanently. Meanwhile, consumer spending had fallen year-on-year by 12 percent.
However, the state Economic Development Department’s (EDD) economic diversity and job expansion drive has done its best to support businesses throughout the worst of the pandemic.
There are two flagship initiatives being pushed. First is the Job Training Incentive Program (JTIP), designed to assist businesses as they create jobs for new workers and advance skills of existing employees. In 2020, JTIP pledged training reimbursements to 75 businesses across the state in support of 2,380 jobs, around 30 percent being targeted in rural areas.
The second major scheme is the Local Economic Development Act, known as the LEDA job-creators fund, which made strategic investments in 18 companies that will create 2,500 new jobs. The beneficiary companies have committed to invest $761 million in New Mexico over the next decade, $150 million of which is being spent on staff wages.
The EDD has also been working to keep the public informed about existing financial assistance programs, publishing a weekly newsletter that lists economic assistance resources for communities and businesses, and hosting more than 30 webinars since the start of the pandemic in March.
A particular pain point in this Pacific Northwest state has been the disproportionate impact COVID-19 has had on travel. Home to a tourism industry that boomed in decade leading up to 2020, Oregon saw travel-related spending increase by 4.2 percent to some $12.3 billion in 2018, activity which provided employment to more than 115,000 Oregonians.
COVID-19, unsurprisingly, has hit hard. While Oregon avoided the worst of the virus when it first arrived in early 2020 in America (and, more specifically, neighboring Washington), deaths have passed the 2,000 mark during the winter period.
As a result, authorities have issued statewide guidance around social distancing, mask wearing and how to undertake a range of activities safely. Alongside this is a four-grade restriction system based on the prevalence of the virus, the highest risk areas subject to the toughest measures, which include closure of indoor entertainment venues and exercise centers.
Tourism and leisure activity are thus enormously reduced. Quarantines, travel directives, event postponements and restrictions placed on venues have all created hardships for the sector, with passenger numbers passing through Portland International Airport still well under 50 percent of pre-COVID levels.
The wider economic impact has been profound. In its Economic and Revenue Forecast published in September, the Oregon Office of Economic Analysis said the state’s economy remains “in a Great Recession-sized hole,” although not as a big a hole as feared previously. For instance, expectations are that the labor market will return to a healthy state by mid-2023.
In response, several economic associations have come together and pooled resources to help companies in all sectors get back on their feet. From business reopening tools and occupational health and safety advice to free COVID-19 safety training and social media drives, many activities are taking place in line with the statewide mission to vaccinate the population and restore public health.
Early on in the pandemic, the Oregon Economic Development Association (OEDA) released a series of economic development priorities for COVID economic recovery, a framework that has informed its ongoing response. It advocates a range of measures, including flexibility for local non-discretionary funds to target those that need support the most and protection of existing state development resources such as the Strategic Reserve Fund and Special Public Work Funds.
The OEDA also supports moves to ease tax burdens on small businesses through loans and grants, as well as the continuation of incentive programs to encourage investment into the state.
“Undoubtedly, more communities will experience significant drops in local wages and employment opportunities,” states the OEDA in its plan for recovery. “Oregon needs to leverage our existing programs to bring sustainable jobs to disadvantaged communities and keep capital flowing to employers looking to invest. Allowances should be made for companies that may be seeing temporary employment reductions related to the pandemic which jeopardize an existing program qualification.”
The OEDA also makes several process-based recommendations, which stress the need to engage a wide range of stakeholders, ensure fair distribution of federal funds, and determine the needs of local employers.
New York State experienced more COVID-related deaths (46,436 as of Feb. 19, 2020) than any other U.S. state except California (48,259 as of the same date). And the economic crisis that currently faces New York City because of the region’s rapid virus transmission is similarly shocking.
In total, the pandemic cost the Big Apple 570,000 jobs in 2020. Its performing arts, retail and hospitalities that would usually have thrived have been some of the hardest hit, with around 1,000 store locations shutting last year.
Such action has resulted in a surge of joblessness, particularly among young people, with 19 percent of all city workers under the age of 25 having lost their jobs by summer 2020. Fast forward to January 2021 and total unemployment stood at 12 percent–a figure that would have been even greater had 240,000 New Yorkers not dropped out of the workforce altogether.
A lack of tourism, dwindling commuter numbers and evacuating residents all put further pressure on a struggling economy. Yet, the New York City Economic Development Corporation (NYCEDC) has been taking various actions to support the individuals and small businesses bearing the brunt of the pandemic-induced recession.
The Queens Small Business Grant Program is one such endeavor. Signed on Jan. 19, 2021, it will provide $15 million in grants to small businesses in the borough, each eligible of receiving up to $20,000.
“Small businesses are the backbone of our communities and their success is key to the city’s long-term economic recovery,” said James Patchett, president and CEO of the NYCEDC.
“We’re thrilled the fund will provide much-needed relief to Queens businesses, particularly to those in the neighborhoods and populations hardest hit by COVID-19.”
The NYCEDC also launched the NYC Small Business Resource Network, a one-stop shop built to accelerate the recovery of small businesses and strengthen the city’s economy. Here, $2.8 million in grants—funded by the Peterson Foundation—are available, with most of these set to go to the minority-, women- and immigrant-owned businesses that have been disproportionately affected.
Approximately 1.3 million people are employed by the city’s 236,000 small businesses, a figure that truly demonstrates their importance to its economic success.