See what clicks on FoxBusiness.com.
The economic toll of the COVID-19 pandemic was difficult to measure, but new estimates from the Federal Reserve suggest it was not as bad as feared for smaller businesses.
The pandemic led to the permanent closure of about 200,000 U.S. businesses above historic levels during the first year of the viral outbreak, according to a study released Thursday by Fed economists. In the past year, about 600,000 businesses a year have closed permanently, or about 8.5%, according to the study.
US businesses close to border cross-border battle
According to Fed economists, businesses account for about two-thirds – or about 130,000 – of the extra closures as historical patterns, which businesses surveyed with employees. Other closed businesses are units of large companies, for example a gap or pizza hut, which closed some places while staying in businesses.
According to the Fed study, it appears that barber shops, nail salons and other personal service providers are being hit the hardest, and that between March 2020 and February 2021 they will close more than 100,000 establishments outside the historically normal levels.
Many small businesses are still struggling to stay afloat, but the new estimate suggests that US business mistakes were less than some economists expected. One previous study estimated that more than 400,000 small businesses closed in the first three months of the pandemic.
GET FOX-BUSINESS PARTS BY CLICK HERE
“The actual exit rate would probably have been lower than widespread early in the pandemic,” the Fed researchers said in their report.
The new estimates are preliminary. In addition, some businesses that adhere to may eventually collapse under the weight of leasebacks, unpaid loans and other expenses.
The Fed estimates do not include the approximately 26 million U.S. businesses without employees. Business failures have traditionally been the largest among the smallest businesses, those with fewer than five employees.
CLICK HERE TO READ MORE ABOUT FOX BUSINESS
The study does not explain why failures in small businesses were lower than expected, but some economists point to extensive government assistance, including the $ 525 billion Paycheck Protection Program. last year forgiving loans to small businesses, and reopened in January with additional funding of $ 284 billion.
“The PPP has allowed small businesses to take matters into their own hands,” says Scott Stern, a management professor at the Massachusetts Institute of Technology, Sloan School of Management, who studies study formation. “Not only are things less bad than we thought, but in an order of magnitude they are less bad.”