The title almost goes without saying. My four kids, ranging in ages from six to 16, certainly have not before lived through a trying time like we are today. The uncertainty that exists with the continuing spread of the coronavirus and the real possibility of us entering an economic recession, or worse, make these unsettling times to say the very least.
We at NACD are doing our best to ensure there is at least a little stability during these troubling times by providing you with the latest developments. The association established a coronavirus resource web page a few weeks ago that association staff regularly update with the latest developments.
There are a few I’d like to point out that are specifically tailored toward businesses that I think are very informative for the business community. The U.S. Federal Emergency Management Agency has a business emergency operations center that houses a wealth of information on the current status of COVID-19 around the world, as well as a number of state and federal resources.
The U.S. Centers for Disease Control and Prevention has released an interim guidance document for businesses and employers to help prevent the spread of acute respiratory illnesses. The document also discusses planning considerations for companies should COVID-19 become more widespread. Additionally, the U.S. Occupational Safety and Health Administration has put out a fact sheet with general information on protecting workers during a pandemic.
And lastly, the U.S. Small Business Administration (SBA) has announced that they’re releasing funds for disaster loan assistance and are providing both a portal to apply for disaster assistance and the list of presidential and SBA declared disasters.
Many of our members have used this resource page, which also includes a voluntary survey on the impact that COVD-19 is having on their companies. It’s clear this virus is having a significant impact on the supply chain and impacting how businesses are operating to help contain the virus. Our survey results bear that out:
To get a better handle on the potential economic impact of COVID-19, I spoke with John Dunham, Managing Partner of John Dunham & Associates, which NACD retained several years ago as our economic consultant. This is what John told me:
With all of the variability surrounding the response to COVID-19 and what can only be dubbed a panic on the part of consumers, the government, and business, it is extremely difficult to determine what, if anything, the long-term effect of the response will be. Obviously, the shutdown of virtually the entire travel and hospitality industry and the rescheduling of concerts, events, and entire sports seasons will damage the economy in the short term. The most current data – weekly unemployment claims – had already been rising slowly during the first quarter, but actually fell the first week of March. We expect that to take a dramatic turn with as many as 37.3 million people working for industries that are being forced to close (like retailing and recreation), the unemployment rate is likely to surge in March, and it is very likely that the economy will shrink. While the Federal Reserve of Atlanta is still forecasting 3.1 percent growth for the first quarter, this is highly unlikely. Goldman Sachs is forecasting zero growth in the first quarter, and we believe that even with a very strong February, this is probably closer to what we will actually see.
What happens for the rest of the year really depends on the next two weeks. If the panic subsides and the economic machinery begins to start turning again, we will likely not see a recession and it is possible that even the recession we are forecasting for the end of the year will be pushed off some. If, however, the panic continues, bearish forecasts suggest that we will enter a steep recession in the second quarter with growth off by as much as five to 10 percent during the next three months.
Clearly, this situation is difficult to predict from an economic perspective at the moment. But it remains a real possibility that this crisis will lead to a significant downturn in the U.S. economy. In order to understand better and mitigate this pandemic for our members, NACD is involved with several government agencies such as the U.S. Department of Homeland Security and industry organizations such as the U.S. Chamber of Commerce that are actively addressing the latest COVID-19 developments.
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