With the coronavirus surging and colder weather limiting outdoor activities, the economy needs another round of fiscal policy support. Aid to small businesses should be part of any federal package, but it should be structured somewhat differently than the original Paycheck Protection Program, according to a commentary in today's Wall Street Journal. The economy added 245,000 jobs in November, and the unemployment rate fell to 6.7 percent. But the pace of job gains is notably slower than the 2.7 million net new jobs added in May and the 4.8 million added in June. Consumer spending is slowing, and consumer confidence is weakening. The household savings rate has plummeted since April, as consumers burn through savings. After a remarkable recovery this spring, a double-dip recession is in the cards. That recovery was aided by PPP, created as part of the Cares Act to provide forgivable loans — essentially grants to finance operating costs — to businesses with fewer than 500 employees, according to the commentary. Our research shows that PPP supported employment and increased financial health in the small-business sector. In addition, PPP supported labor demand and is reducing the length of the recovery by helping small businesses — the potential employers of any unemployed workers — to survive over the spring, summer and fall. Read more. (Subscription required.)
*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.
In related news, the Senate Committee on Small Business and Entrepreneurship will hold a hearing tomorrow at 10 a.m. EDT titled "Small Business in Crisis: The 2020 Paycheck Protection Program and its Future." For a link to the live webcast and prepared witness testimony, please click here.
