60% Permanent Business Closure...More Stimulus to Follow-THE U.S-SERIES 1

 

Stimulus packages don’t always help to paint a rosy picture. The US stimulus package has failed to stop business closure and from unemployment to grow significantly. US election can portray but the reality is far different.   Single professionals like Lawyers, Real estate agents, Accountants architects etc have shut down completely. The reality of loss cannot be hidden and we have tried our best to get a few glimpses of the reality to project what type of stimulus will be coming in the next 6 months down the line. The world is getting ready for trillion-dollar of the stimulus package.  The loss of the US is enough to convey what one can expect in terms of Stimulus?   

As of August 31, 163,735 total U.S. businesses on Yelp have closed since the beginning of the pandemic (observed as March 1), a 23% increase since July 10. Both permanent and temporary closures rise across the nation, with 60% of those closed businesses not reopening (97,966 permanently closed). The story does not end here.

More than 6M households missed their rent or mortgage payment in September. In September, 8.5% of renters, or 2.82 million households, missed, delayed or made a reduced payment while 7.1%, or 3.37 million homeowners, missed their mortgage payment. Renters receiving unemployment benefits rose from 3% in early April to 7% by the end of September.

While digging further we came up that 88% of U.S. small business owners have exhausted their Pay-check Protection Program (PPP) loan and 32% of loan recipients have been forced to lay-off employees or cut wages as a result of exhausting their loan funding. Don’t ignore this number since getting into the number of US small business we find that US Small businesses provide half of all private-sector jobs in the The U.S. and an even larger percentage in many underserved communities. The unemployment numbers are coming up from key states like, including Florida, Texas, New York, New Jersey, Illinois and Georgia. For the states with widespread business closures, the economic struggle appears to be closely coupled with unemployment rates. Hawaii, California, and Nevada have the highest rate of total closures and permanent closures.

 Nearly half of small businesses surveyed have cut spending because of COVID-19. 21% tapped their personal savings; 8% borrowed from their retirement accounts, and 7% took out a personal loan. 60% applied for a PPP loan of which 26% received it (including 41% of those in 100 – 499 employee sized companies and just 17% of fewer than 25 employee companies).

26M student debt borrowers missed September payments. The proportion of student debt borrowers who missed a monthly payment has remained steady at 40% since May. Most student loans, or about 92%, are owned by the U.S. Department of Education hence this number does not include private student loans. Private student loans make up 7.87% of the total outstanding U.S. student loans.

 The stimulus story is not going to end and the world market will be flooded with liquidity as the business are lost forever and living standards are just getting deteriorate. We think that the world will need another $6 trillion more funding keeping the global economy alive.  The biggest risk for the global economy is the permanent shut down of business which has far flounced impact on the long term economy.  Consumption from industries and companies comes to an end due to a permanent closure of companies   

 2^nd wave is already in making:

Europe is currently facing a 2nd wave and the same will now get started in US where experts have warned of the probability for an increase in cases coming up due to multiple colliding forces: college campuses opening, K-12 students returning to school and pandemic fatigue. The US is just 66 days away from the official start of winter hence round 2 cannot be ruled out but at the same time having advanced knowledge about the disease helps to manage the same better as compared to last winter. 2^ndwave will kill more business for permanently. The above number will grow significantly despite any stimulus since buying business loss for infinite time cannot be carried on. Fiscal deficit of the US is going to be a mammoth number which will take decades to get reduced which is unlikely to happen. The current US election is just a matter of time and whoever wins the White House he is going to spend the sleepless night for the next 4 years since the economic deficit will create havoc on the country.

Vaccination is the ultimate stimulus to get the global economy back on track. Stimulus packages have not been able to save the closure of the business. This means that either the corpus of the package is underestimated or there are some mal-practices while disbursement. The projection numbers are weak enough after going through this data.  This data analysis belongs to only one country only. We have Europe and India to cover where the depth is more and pain is unheard. We did not still count the social imbalances and unrest within societies where the number of suicides is enough to make someone scary. Pandemic alone have not taken life but through other form deaths too.