The Coronavirus is far from being a novelty anymore, but it does not show signs of leaving us for good either. For the past 9 months, businesses and individuals alike have encountered significant challenges in successfully completing their daily activities. Shelter-in-place rules had us questioning every reason for getting out of the house to determine if it is a necessity or if it can be postponed, and businesses were forced to allow employees to work from home, even if that meant altering or entirely changing their business models.
Pennsylvania was always referred to as a Goldilocks economy – never too hot or too cold – that’s to the state’s diversified business activities. So, when unemployment claims skyrocketed and the numbers turned out to be higher than in most states, officials were initially taken by surprise.
Decisions to shut down businesses, long before other states decided to do so, were not well-received at first, but it was agreed it was the only way to decelerate the spreading of the virus and keep hospitals from overcrowding with patients. However, it does not mean these decisions did not have serious implications. Furloughs, layoffs, slashed hours – these are just some of the reasons that contributed to many Pennsylvanians struggling to maintain a financial safety net.
But Pennsylvania was not the only state to suffer from the implications of this ongoing pandemic. A survey of 3,753 adults fielded in June this year suggests half of American households lost some of their income due to Coronavirus, and the numbers are still growing.
By July 11, 30.2 million Americans were receiving unemployment checks, with the U.S. economy suffering its biggest hit since the Great Depression. Gross domestic product collapsed and hit a 32.9% annualized rate in the second quarter of the year, representing the deepest decline since 1947, when the government started keeping records.
More than half a year went by since the WHO declared COVID-19 a pandemic, and the path towards recovery is still nowhere near clear. The pandemic revealed issues in the country’s economy, such as the lack of shock absorbers and a system that, despite maximizing profits, was also highly exposed to risks.
Contrasts between the American image of abundance and the actual, real needs of its many citizens have become even more obvious in times of financial crisis, and the consequences can be felt on almost any level, especially when it comes to small businesses that have been forced to shut down indefinitely.
All businesses were undoubtedly hit by the pandemic, but small businesses were the ones to suffer most. Businesses with fewer than 100 employees have been hit the hardest, with nearly 30 million jobs being put at risk. Almost half of these jobs involve industries such as healthcare, social assistance, construction, retailing, accommodation, and food. A lot of these people are workers with lower educational attainment and wages. The major danger that sits behind these numbers is the fact that, unfortunately, those who can’t afford it will be the ones suffering the most significant consequences.
Back in May, a survey on 1,500 small business owners throughout the U.S. revealed nearly 75% of them fear they may not be able to exist for more than three months if drops in sales continue to increase.
Things seem to be slowly changing for the better in the past few months, but businesses still fear uncertainty. The Census Bureau reported at the end of June that 38% of small businesses were expecting a large negative effect from the pandemic. While this is not a satisfactory percentage, it is slightly better than the 51% reported two months prior.
When it comes to customer demand, the situation was looking very grim in April, when 80% of small businesses were serving fewer customers than they did before. In mid-June, the number was reduced to two thirds – a significant improvement.
Even though the COVID-19 pandemic is far from being over, things seem to be slowly headed towards a growth path, especially for the economy, but many people are struggling to financially recover from the hit.
If you have been in this situation and you don’t know where to start, here is what you can do to get yourself back on track:
Start by examining how much your life actually costs and what you can do to cut down on some of these expenses. What are the things that you are not using these days? Maybe you have travel insurance because you used to travel a lot pre-Coronavirus, but now that you can’t actually benefit from it, it may be better to give up your policy and redirect that money towards necessities. Ditch restaurant meals, gym subscriptions, and try to reduce any other recurring expenses, and you will be able to save some money. This can include lowering your data package or ditching cable for a while.
Interest rates can really take a toll on your finances, especially in a period like this. Even as little as a 1% decrease in interest rates can make a significant difference in your overall financial wellness. Consider refinancing your home or taking out a bigger installment loan to cover your credit card or other small loans that have been accumulating over the years. Sit down, reevaluate your options, and try to come up with a solution that benefits your household.
Moving house during a pandemic sounds a little bit drastic, but there is no reason to remain in a huge home if you can’t afford it anymore. If you are renting, consider switching to a smaller apartment, at least for a while, until you get back on your feet. If the city you live in has been heavily hit by the pandemic, maybe moving is not such a bad idea. With businesses allowing employees to work remotely now, it is expected that many people will be moving from big cities and towards smaller, less expensive towns.