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The widespread economic disruption triggered by COVID-19 in the USA had left the small business segment battered and bruised. The initial impact of the pandemic in America in March 2020 was extremely shocking, both for health and the economy. Rampant closure of businesses almost overnight and surging unemployment that reached levels never seen since the Great Depression brought the economy to its knees. Results of various studies about the situation prevailing at that time showed that there was a massive reduction of 20% of self-employed people and those employed.
Small businesses – one of the hardest-hit sectors
Small businesses constitute almost 99.9% of business in the USA and form the backbone of the economy that fell flat in the face of the massive pandemic surge that continued for almost two years at varying paces. Small businesses taken together are the biggest employers in the US. Almost half of the nation’s workforce (47.3%) engaged by small businesses suffered immensely due to retrenchment, layoff, and termination, as small businesses desperately tried to survive the onslaught of the pandemic. Amid the pandemic, small businesses were among the hardest-hit sectors.
The scenario a year after the pandemic
The above was the picture when the pandemic was at its peak and small businesses were struggling hard to stay afloat or survive quietly and make a comeback when the situation improved. So, how was the recovery rate for small businesses after about a year when mass vaccination across the nation encouraged economic revival? As of May 2021, the recovery rate was dismal, to say the least. Surveys conducted to ascertain the recovery rate across the country showed that 34% of small businesses were still to reopen. The closure rate was the highest in San Francisco (48%) and the highest spiraling occurred in New York City. However, Honolulu which thrives on tourism had seen the highest number of businesses reopening as Covid19 restrictions eased and numbers steadily rose in the travel and tourism industry.
The uneven pace of economic recovery
Although nearly half of the US population received vaccines by mid-2021 and the vaccine rollout speed was quite impressive, the pace of economic recovery of different sectors was quite divergent. For example, the professional service sector experienced a faster recovery than the leisure and hospitality sectors. The signs point to a K-shaped recovery of the economy.
In 2022, more small businesses are recovering from the pandemic effect and recorded a 2.2 % increase in growth over the previous year.