How The Economy Is Doing in “Uncertain” Recovery

Jennifer McCluskey

This article presents a brief overview of how the economy is reportedly doing in this uncertain “recovery” from COVID, and how national trends are echoed in our north country area. As of time of this writing, the first week in October, the economy is starting to grow again, slowly, with a lot of uncertainty. According to The Economist Magazine (9/19/20 edition), after dropping 20% in the second quarter of 2020, global gross domestic product is forecast to grow 7% in the third quarter. Other articles call this a “historic bounce.” While growth is fantastic, there is still a lot of ground to be made up. The Economist reports the global economy is operating at about 90% of capacity. 

    Some industries are doing better than others. For example, housing purchases have dramatically increased, which may in turn lift consumer spending as new home owners begin to buy furnishings and realize they need new water heaters. Even in the north country, properties are getting multiple offers both from local residents ready to upgrade and from downstate people looking to move farther from crowds. According to a local real estate broker, houses with land or waterfront are being snapped up as soon as they come on the market. Local hardware stores and contractors are also busy as homeowners try to get repairs in before winter. Other businesses that relate to home improvement or socially distanced outdoor activities, like powersports sales, RV sales, garden centers, and golf courses, among others, have seen record years. Burpee, the online seed retailer, has said this has been their largest sale year ever in their 144 years. 

    Retail sales have bounced back somewhat nationally and internationally. According to JPMorgan Chase, global retail sales were back to where they were before the pandemic by July. Which makes sense, people stuck at home have had nothing else to do but shop on their computers, and have had stimulus checks with which to do so. There’s also been a little more money around as people commute less and travel less, so save on their gas bill (which is maybe not so good for local gas stations!). This is one of the reasons retail businesses should get into ecommerce. New York state has recently developed several initiatives to help retail businesses sell online. Check out https://coopcareers.org/mainstreet-online for more details and keep an eye on news releases from New York State as other programs may be available soon. 

    Some retail businesses have been busy but have also been hampered by lack of supply from manufacturers. I have heard reports from several people that automobiles are being sold as soon as they hit the lot. Kayaks too are hard to come by, as this summer saw a great increase in demand with less supply coming in from manufacturers. 

    Services, however, have been significantly down as these are much more susceptible to people avoiding crowds, and restrictions like decreased dining capacity in restaurants. According to data from OpenTable, the number of diners in restaurants remains 30-40% lower worldwide. This is likely even lower in New York state due to strict social distancing regulations. Flights, travel, and hotels are also way down. Consumer confidence is somewhat unstable as well, falling in August to its lowest level since 2014. This is likely a combination of the end of government stimulus programs and increased COVID cases in parts of the country. Visa surveyed small business owners (www.visa.com/EconomicInsights) and found that 35% report they have started to recover financially and expect to fully recover in the next 12 months. Of those that have not yet started to recover financially, 43% expect to start seeing recovery in the next three to six months, while 22% do not. The long-term employment forecast is also pretty slow, projections from the Fed indicate unemployment will not return to is pre-pandemic levels until 2023. So while there are some high points, there is still a lot of ground to cover, especially in the restaurant and hospitality industries. Further federal stimulus money seems somewhat unlikely at this point unless there is another surge of COVID forcing additional business closures, but these industries in particular could benefit from more assistance. 

    If your business needs help with recovery, you can contact your local Small Business Development Center to talk with a business advisor confidentially and free of charge. You can reach the SUNY Canton SBDC at (315) 386-7312, SUNY Canton SBDC at Clinton Community College at (518) 324-7232, or the Watertown SBDC at JCC (315) 782-9262.