Coronavirus Shutdown Could Cause Massive Small Business Casualties

The authorities may or may not have “flattened the curve” of the C-virus.

But they’ve surely squashed the U.S. economy. Today, we scrape it up off the pavement to see how flat it is.

Yahoo! Finance reported this morning that…

Another 3 million Americans are expected to have filed for unemployment benefits during the week ending May 2, following 3.839 million initial jobless claims in the prior week. So far over the past six weeks, more than 30 million Americans have filed unemployment insurance claims.

So far, more people have lost their jobs than in all the recessions since World War II – put together.

Turning Off the Economy

And now, the press reports that those “temporary” job losses are here to stay. Here’s Bloomberg:

Plenty of layoffs that just a month ago were labeled “temporary” are now tagged “indefinite” or “permanent.” Alongside announcements of sweeping staff cuts by major employers such as Boeing Co. and U.S. Steel Corp. and the accelerating pace of downsizing in brick-and-mortar retailing, such notices are a sign that even as businesses continue to hope for a speedy recovery, they are starting to plan for a slow one.

The new permanent layoffs are hitting a wide swath of the economy both geographically and sectorally. Uber Technologies Inc. on Wednesday became the latest major company to announce long-term layoffs, saying it would be eliminating 3,700 jobs, or 14% of its staff worldwide. A day earlier, Airbnb Inc. said it was cutting 25% of its workforce, or about 1,900 people worldwide. 

Turning off the economy is a bit like shutting down the engines on a transatlantic flight. For a long time, the plane stays in the air. Everything is suddenly quiet.

Passengers don’t know what to think. Up in business class, investors look to buy the dip… and expect the pilot to pour on the fuel and gain altitude at any minute.

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