May 13, 2020 - Economy & Business

Americans don't realize that coronavirus recovery may take months

Illustration: Aïda Amer/Axios

Economic experts including Fed chair Jerome Powell, IMF chief economist Gita Gopinath and a multitude of top market analysts and economists have been saying for weeks that a quick economic recovery is a "fantasy" and likely at least a year away.

The state of play: Average Americans aren't listening, and many are still banking on a V-shaped bounceback from the coronavirus pandemic once lockdown orders are lifted.

Driving the news: The NFIB's latest small business optimism survey showed that a "collapse in sales has led to lower earnings and dampened employment prospects for months to come."

  • "However, small business owners remain optimistic in the face of adversity as more expect the economy to improve ... and expect the recession to be short-lived."
  • Business expectations over the next six months jumped by 24 points from March.
  • And the outlook for business conditions in April rose to the highest in more than 18 months.

One level deeper: Workers have shown similar optimism, with 78% of all unemployed Americans expecting to be rehired in the next six months.

  • However, a new study by top academic researchers projects that more than 100,000 small businesses have closed permanently since late March, with at least 2% of all American small businesses now gone.
  • At least 3% of restaurant operators have gone out of business, according to the National Restaurant Association.
  • Major companies like Neiman Marcus, Forever 21, Gold’s Gym and Modell’s Sporting Goods have announced bankruptcy plans, while 3,000 store closings have been confirmed this year by companies including GNC, Macy's, GameStop and many others.

What's happening: "Consumer confidence is signaling a bit of cognitive dissonance right now," Joseph Brusuelas, chief economist at tax and consulting firm RSM, tells Axios. "People want to believe that their portfolios will recover in one calendar year."

  • A Harris Poll survey of ordinary Americans released today found nearly a quarter (23%) have put more money into the stock market, compared to 19% who have taken money out and 45% who made no changes.

The last word: That "cognitive dissonance" could also help explain why even with an unemployment rate that's likely above 25%, U.S. rent payments have decreased by just 1.5% from comparable May 2019 levels, despite eviction moratoriums.

Go deeper: States face economic death spiral from coronavirus

Go deeper

U.S. coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios. This graphic includes "probable deaths" that New York City began reporting on April 14.

About 40.7 million Americans have filed for unemployment since the coronavirus pandemic began, including 2.1 million more claims filed from last week.

Why it matters: Even as states reopen their economies, Americans are still seeking relief. Revised data out Thursday also showed U.S. economy shrunk by an annualized 5% in the first quarter — worse than the initially estimate of 4.8%.

U.S. coronavirus death toll crosses 100,000

Data: Johns Hopkins University; Chart: Danielle Alberti/Axios

More than 100,000 Americans have died of the coronavirus, according to data from Johns Hopkins — a terrible milestone that puts the death toll far beyond some of the most tragic events in U.S. history.

By the numbers: The death toll from COVID-19 now stands at more than 34 times the number of people who died on 9/11.

D.C. chef: Restaurants need more time to spend PPP money

Photo: Axios screenshot

Restaurants need more time to spend money they've received from the federal government's Paycheck Protection Program to ensure that the loans are forgivable, Kwame Onwuachi, owner and head chef of Kith and Kin, a D.C.-based restaurant, said during an Axios digital event.

Why it matters: Onwuachi said small restaurants are reaching the end of the eight-week time limit to spend the money. If they do not spend the money, the loans may not be forgiven.