Hidden impacts fueling uneven economic recovery
As we’ve seen throughout this historic economic downturn, some industries and communities continue to experience the impact of the pandemic very differently. Some impacts are clear as public health measures have required prolonged closures or curtailment of restaurants, bars, gyms and gathering places. Others are less obvious, but no less challenging.
As we learn, work and spend more time at home, businesses that remain open and fully operational are also struggling. Consumer behavior has significantly changed, out of necessity and choice. We’re not driving, ride-sharing or taking public transportation as much. Significant numbers of people continue working from home meaning fewer stops to coffee shops, lunch spots and dry-cleaners. Even where it is possible to continue to patronize restaurants, retailers, salons and other establishments, some no longer have the financial means to do so, while others will choose to limit activities until they feel safer.
Our Economic Recovery Dashboard shows a more than 14% decrease statewide in time spent out of the home during the day. This is up from the 25% drop following the initial lockdown last March, but still significantly lower than normal. The trickle down impact of that lost activity is real, and the possibility of a “K-shaped” recovery in which some industries and communities are left behind will have long-term consequences for all of us.
Some sectors of our economy are indeed weathering the storm and growing, including retail trade (primarily electronic shopping), construction and IT services, all of which are outperforming the U.S. average according to the Economic and Revenue Forecast Council’s January update.
Commerce has worked to direct nearly $1 billion to the hardest-hit businesses and communities. Our most recent round of Working Washington small business grants was tightly focused on those directly impacted by public health measures – full-service restaurants, bars, gyms and indoor venues. We’ve also administered nonprofit equity relief grants that have helped hundreds of disproportionately impacted nonprofit organizations in some of our most historically underserved communities.
Now as the Legislature considers early action that could infuse $240 million for small business assistance and $365 million for rent assistance, we are mindful that some business sectors and communities are still fighting for their livelihood. There is no question the need for assistance remains higher than the amount of resources available, but with vaccine distribution underway, new federal aid underway and additional state support coming soon, businesses are proving to be as resilient and creative as ever. While still slow, the curve on all new small business openings is trending upward, significantly in some sectors. For example, new retail and transportation business openings in January were down just over 15% compared to January 2020, rising steadily from a low near 40% in April.
We will continue to track data by industry, region and population in order to steward investment of state and federal funds in ways that strengthen communities and provide equal access and opportunity to recover and rebuild.