9 MILLION SMALL BUSINESSES 

IN DANGER OF CLOSING 

10 MILLION BEHIND ON RENT

By

Søren Nielsen

2021

The economic downturn that we are currently experiencing is making the last recession look like a Sunday picnic. 

Yes, 2008 and 2009 were bad, but they weren’t anything like this.  

Unprecedented intervention by the Federal Reserve has allowed the rich to get even richer during this crisis, but meanwhile millions upon millions of ordinary Americans are deeply suffering.  

Unfortunately, what we have gone through so far is just the beginning.

As a child, I was a big fan of Sesame Street, and one of the characters that really stood out to me was Count von Count.  

I loved the fact that he was always counting things, and that is what I am going to do in this article in order to illustrate how bad economic conditions have now become.

Let’s start with the number 7.  

According to the Congressional Budget Office, approximately 7 million more Americans would have jobs right now if the COVID-19 pandemic had never happened…

But in fact, what the CBO is projecting is dire: around 7 million people out of work in 2021 whom CBO thought before the pandemic would be working. 

That’s dire – and a call to immediate action, not calm, not wait-and-see.

In fact, the Federal Reserve says that 152 million Americans were working before the pandemic started, and only 142 million Americans are working now.

So the CBO estimate appears to be off by about 3 million.

Count von Count would not be happy.

Let’s try another number.  

According to Bloomberg, the number of Americans living in poverty has risen by 8 million during this crisis…

Support is rising among policy makers to address America’s child-poverty crisis, which is getting worse as the pandemic drags on.

More than 8 million Americans — including many children — fell into poverty during the second half of last year, exacerbating the racial and income inequalities that are holding back the U.S. economy.

In this case, I think that this is a reasonable estimate, but that number will inevitably keep growing in the months ahead.

One of the big reasons why it will continue to rise is because hordes of small businesses will be collapsing, and that brings us to our next number.

According to a study that was recently released by the Fed, 9 million small businesses in the U.S. say that they "won’t survive" in 2021 without more government assistance…

Three in ten small businesses — or 9 million out of the estimated 30 million in the United States — fear they won’t survive in the coming year without additional government assistance, according to a survey recently published by the Federal Reserve.

The Small Business Credit Survey, which was conducted last September and October and released last week, showcased the incredible burden the coronavirus pandemic has placed on America’s small businesses, as 88% of the businesses surveyed reported that sales had not yet returned to pre-pandemic levels.

Can you imagine what our country would look like if almost a third of all small businesses permanently disappeared?

If you watched the Super Bowl, you were bombarded with messaging about the plight of our small businesses.  

We have never seen anything like this before, and that is because our small businesses have never had to face a crisis of this magnitude.

With each passing day, more small businesses are folding, and nothing that the federal government is going to do will completely stop this trend.

Our next number is 10.  

According to the U.S. Census Bureau, 10 million renters were behind on their rent payments in January, and many more people anticipated not paying rent in February…

An estimated 10 million renters were behind on their rent and at risk of eviction in the middle of January, according to a Census Bureau survey. 

And an estimated 16 million renters had little to no confidence they could pay rent in February.

Overall, U.S. renters now owe at least 30 billion dollars in back rent.

This has created extreme financial pain for America’s landlords, and when the rent moratoriums are finally lifted we are going to see the largest tsunami of evictions in all of U.S. history by a very wide margin.

Before I wrap up this article, let me leave you with just one more number.  

So far in 2021, the number of passengers at U.S. airports is down by more than 60 percentcompared to 2019…

Over the past seven days, not quite 707,000 passengers per day on average passed TSA checkpoints at US airports, a measure of how many passengers in the US are flying somewhere. 

This was down by 61.6% from the same period in 2019, the last full year of the Good Times. 

At the end of January, the drop from 2019 was over 65%.

I honestly do not know how the airline industry is going to survive this without government help.

Speaking of not surviving, Democrats have introduced a bill in Congress that would essentially deal a death blow to the gig economy…

The legislation at the core of their agenda is the PRO Act, which Democrats just re-introduced with sponsors including Speaker of the House Nancy Pelosi and Senate Majority leader Chuck Schumer. 

Among many other things, the bill would severely restrict the legal definition of independent contractors in a way that would largely end the gig economy as we know it.

The legislators’ stated intention is to protect workers and bolster their rights under law. 

Through the reclassification of independent contractors, Democrats hope to force gig economy companies to hire workers as full employees and thus provide them the accompanying salaries and benefits.

If this bill passes, it would absolutely devastate Uber, Lyft and countless other companies that rely on gig workers.

Basically, millions of jobs would go "poof" with one stroke of Joe Biden’s pen.

According to the Bureau of Labor Statistics, more than 50 million Americans are currently employed by the gig economy.  

It is great to want those workers to have higher pay and more benefits, but if those companies go out of existence there won’t be any jobs at all.

These are very dark times for the U.S. economy, and the outlook for the future is exceedingly bleak.

However, in the short-term economic conditions should stabilize somewhat thanks to the huge stimulus payments that the government will be sending out.

Here`s why the stimulus deal is such a big deal for Europe.

After a hard-fought battle, the European Union’s landmark 1.8 trillion-euro ($2.2 trillion) budget and stimulus package has finally got over the line.

It’s quite the achievement. 

Not only will the funds help the region overcome the economic damage the coronavirus left in its wake, but they pave the way for much deeper integration in the bloc and set the stage for the continent’s transition to a low-carbon economy. 

Europe’s leaders will also be hoping that the agreement puts talk of an EU breakup firmly in the past.

For the European Central Bank, which on Thursday extended its huge emergency bond-buying program, the funds help address its repeated call for fiscal policy to move to the forefront of economic support. 

In addition to being a broad complement to monetary policy, the deal also has a technical benefit. 

Part of the package is financed by jointly backed bonds, which should provide the ECB with another asset to buy.

The region’s markets have received a major boost. 

The euro is at its highest level since mid-2018 versus the dollar and the borrowing costs of heavily indebted nations like Italy and Spain have fallen dramatically -- despite unprecedented government spending.

Here’s a look at why the EU’s recovery deal is quite so important.

Hamiltonian Moment:

1: Riffing off what happened in the U.S. in 1790, a so-called Hamilton moment would be the mutualizing of obligations across all 27 member countries. That would require treaty changes adopted by national parliaments and in some cases referendums.

2: The new package doesn’t go that far, but it’s a step in that direction, with the promise that the debt to fund grants and loans to member will be issued jointly, rather than taken on national balance sheets.

3: Along with ECB’s bond buying, that’s helped to rein in borrowing costs even for euro-area countries with huge debt burdens and perilous fiscal situations.

4: Spanish 10-year bond yields dipped below 0% Friday, following their Portuguese peers earlier this week, and it’s looking increasingly likely that those of other peripheral nations, like Italy and Greece, will soon follow suit.

Economic Impact :

1: The European Commission has estimated that the plan could add around 2% to the bloc’s economic output by 2024 and create 2 million additional jobs by 2022.

2: Some economists have said it could end up being less than that if the EU funds replace money that would have come out of national coffers. It’s also not yet clear to what extent countries will draw on the loans that are on offer.

3: A major benefit is that the recovery funds will help soften the blow for countries that are harder hit by the crisis, for example because their economies rely to a greater extent on tourism. The EU has been particularly alarmed by the uneven shock of the virus and the widening of the region’s north-south divide.

Helping the Central Bank : 

1: ECB officials have lauded the agreement as a "game changer," mostly because it displays solidarity between richer and poorer member states. Even before the pandemic struck, the institution had called on members of the 19 nation euro area to invest in their economies and lift growth.

2: If the plan is successful, it could help the ECB get inflation closer to its target of just under 2%.

3: President Christine Lagarde said Thursday that the recovery fund should become "operational without delay." She’s also stressed that the EU aid money should be spent in a way that increases longer-term growth and shouldn’t get lost in national budgets.

4: Lagarde has even suggested making the recovery fund a permanent tool for similar crises in the future, and that it could "enrich" the long-standing debate over a common euro-area budget.

5: The EU bonds backing the program are also another asset for the ECB’s quantitative-easing programs. That reduces the risk it’ll eat up so much national debt that it crushes markets and faces accusations of monetary financing.

A New Safe Asset.

1: German bonds have been seen as Europe’s benchmark, but they fall short of being a rival to Treasuries given there’s not enough of them to go round and they don’t adequately represent risk for the wider region.

2: Jointly issued debt will go some way to raising the profile of a European "safe asset," though, and will finally give investors a security for the whole of the bloc.

3: It could also elevate the status of the euro versus the dollar. Progress on the fund has helped push the currency above $1.20, to a two-and-a-half-year high.

Social and Green Leader.

1: The EU is set to become the world’s biggest issuer of green debt, with a third of the bonds being issued to come under the environmentally-friendly tag.

2: The bloc will publish an accompanying green taxonomy and green bond standard next year, and it’s widely expected to become a blueprint for the rapidly growing market.

3: Demand from investors for EU social-debt, which is going toward a regional job-support program, already smashed records this year, drumming up billions of euros of orders.

Another Defeat of Populists.

1: The agreement means future EU funds will be tied to the rule of law, a link Hungary and Poland have been opposing. While the two countries won a possible delay to the establishment of such a mechanism, the bloc ultimately took a step toward adopting a tougher tool to sanction governments that erode democratic standards.

2: This comes on the heels of the U.S. election, which may have taken some of the wind out of the populists’ sails. The EU’s illiberal members had been emboldened by Donald Trump’s ascent and rule over the past four years.

A Stronger Economic Toolbox.

1: The recovery fund joins a series of other tools adopted this year to strengthen the EU’s economic arsenal, including measures to help businesses and workers.

2: It also comes just a week after the euro area finally agreed on a long-awaited reform of its bailout fund, a deal that could pave the way for more ambitious work on strengthening the euro’s architecture.

But that bubble of hope will be very brief, and everyone should be able to see that much more pain is on the horizon.