By Brian Moran
On March 1, 2020 I was in Milwaukee, Wisconsin with my college roommates at a basketball game. People were concerned about COVID-19, but there weren’t any lockdowns yet, and almost nobody was wearing a mask. Unbeknownst to most, two weeks later, our world would be flipped upside down.
It is now April 2021 and the American economy is starting to see a light at the end of the coronavirus tunnel. The biggest questions now center around when will the economy fully open? I asked six subject matter experts in different segments of the small-to-midsize business market for their opinions on what the next 90 days have in store for our economy.
Here’s what they had to say:
Andrew Sherman - By the end of May, I believe our economy will enjoy the benefits of the positive impact of the PPP loan program, the $1.9 trillion stimulus package, improved vaccination rates, and businesses starting to fully reopen as consumer confidence rises. That's the good news.
There remain significant concerns about commercial and residential real estate occupancy rates and the redefining of the workplace. Millions of businesses and homeowners haven't paid their mortgages or rent since last March without fear of eviction thanks to government intervention at federal, state, and local levels.
Prognosticators and experts alike should keep a close eye on the real estate market and its potential impact on derailing the efforts of our government to kickstart the economy. A close watch should also be kept on the status of the hospitality industry in the latter half of 2021.
Barbara Weltman -SMBs can’t ignore the impact of the $1.9 trillion government relief package on their budgets, finances, taxes, and more. SMBs will likely have greater access to government financing programs, with more funding going to targeted Economic Injury Disaster Loan advance payments, the new restaurant revitalization grants, additional money for shuttered venue operators, and the creation of a “community navigator” to increase awareness about relief programs for SMBs.
Expect to see tax law changes, including extensions for the employee retention credit, the paid sick and family leave credits, and an increase in the exclusion for employer-provided dependent care assistance, all of which will mean keeping a close eye on payroll costs and benefits programs.
With so much money coming into the economy because of the new law, there could be more inflation that pushes up interest rates and would cost SMBs more for using their bank lines of credit and financing purchases through their credit cards. It’s going to be a wild several months for sure, but things are looking up.
Chad Moutray - Manufacturing was hard-hit at the beginning of the COVID-19 pandemic, losing 20% of production and more than 1.3 million workers, but more recently, the sector has been a bright spot. Demand and output have been robust, and business leaders are upbeat about the next few months, especially later this year.
Much of the optimism stems from a belief that activity will rebound strongly once more Americans are vaccinated and the economy starts to get back to the “new normal.” With that said, manufacturers continue to cite sizable supply chain constraints currently, including worker and logistics challenges, and demand has outstripped supply in the production process for many. The result has been a backlog of orders that has soared to the highest level in 17 years, and raw material costs rising at the fastest rate in a decade. Hopefully, those problems are transitory in nature, but they are real concerns right now.
Dileep Rao - America and the world will be open to a global party. Most Americans will be vaccinated and feel more confident about their health. With many Americans coming out of the pandemic in a better financial situation than when they went in, especially if the stock market does not fall, we will be back to spending, being social, and seeing friends and family. This will be great for bars, restaurants, and travel. Until the party stops.
The rest of America will have their best shot at competing with Silicon Valley to develop unicorns, especially since many of the bright, young techies would have left the valley for cheaper pastures. But the rest of America will squander this chance to develop unicorns because they will try to compete with Silicon Valley using venture capital, which is Silicon Valley’s strength, rather than with unicorn entrepreneurs. It they want a chance at success, the rest of America needs to focus on skills before capital.
Kathleen Sullivan Garman - In supply chain, order flow and logistics for e-commerce, the next 90 days will be a continuation of the fallout from the big surge of online shipping in 2020. While some states are starting to open more in terms of dining, shopping and social activities, consumer demand still seems to be extraordinarily strong for e-commerce shopping and we don't expect that to diminish in the short-term future. Many brick and mortar stores are enhancing their online presence to maintain cash flow while they wait for consumers to come back to their stores. Platforms like Shopify and server providers like AWS are working hard to keep up. The big shifts in terms of e-commerce fulfillment are coming as merchants are seeing the gaps and flaws in their current fulfillment systems, some shifting from self-fulfill to 3PLs (fulfillment warehouses) and others finding new 3PLs that are more geared to their shifting landscape of higher order volume.
Regardless of your industry or the size of your company, it is imperative to keep a keen eye on news about COVID, vaccines, and the economic indicators that play a role in your business. Create 30-day plans for April, May and June to determine where you want your business to be at the end of each month. The plans will help steer you, hopefully, into clear waters for better sailing.