In response to Covid, the federal government rolled out a number of programs to help stabilize the economy. The most well known was the PPP, or Payroll Protection Program of loans, most of which were forgiven, making them grants. PPP loans probably did protect payrolls and it certainly put a lot of money into business owners’ hands.
What it also did was prop up many businesses that would have otherwise failed, which was a big part of what it was supposed to do. In many cases, we’re now seeing that PPP funds simply deferred the failure of many businesses. I call this the Covid Hangover, the morning after.
The businesses that were kept alive by PPP funds are, in many cases, failing now. There is a knock-on effect of this, of course, as these failures mean less business and consumer spending in the economy.
A case study: My wife and I own a small restaurant in South Everett on Evergreen Way (Highway 99). (No, I don’t work in the restaurant, which is good for so many reasons.) We’ve done well in the almost year we’ve owned it. In fact, our sales have been roughly 250% of the volume done by the prior owner. But now we’re starting to see failures of other small restaurants around us, which might help us, but one hates to see any small business fail.
Across the street from us was Epic Ford, a Ford dealership that has been in business since 1971. The dealership wasn’t sold or relocated; it has just been shut down. We used to get both employees and customers who would walk across the street for a meal. No more, as the building sits vacant with a For Sale sign.
The Everett Boeing plant has provided us with a second lunch rush. We had the normal noon rush, then another rush after 2:00, which is the time the morning shift ends. After 2:00 we’d see many Boeing workers come to our restaurant, Happy Pho, after they got off work. That shift’s workforce has been substantially reduced, with most of the layoffs being the older, higher-paid workers.
All this and the economy is still relatively good. Or are we, as I predicted in my last blog, already in a recession and the above anecdotes just evidence of this? Will this summer’s economic statistics confirm this? Time will tell.
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