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Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

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Illustration: Eniola Odetunde/Axios

The coronavirus pandemic has changed the game for U.S. businesses, pushing forward years-long shifts in workplaces, technology and buying habits and forcing small businesses to fight just to survive.

Why it matters: These changes are providing an almost insurmountable advantage to big companies, which are positioned to come out of the recession stronger and with greater market share than ever.

What we're hearing: "There is no doubt that the longer this pandemic pulverizes this economy the main victims will be small and midsized companies," Bernard Baumohl, chief economist at The Economic Outlook Group, tells Axios.

  • "We’re seeing the whole business landscape dramatically undergo massive changes and one part of this is how large companies with resources will take advantage of the troubles, travails and financial problems small companies have."

What to watch: Big companies, which have benefited far more from Congress and the Federal Reserve's coronavirus relief efforts, are expected to buy out or simply wait out smaller competitors.

The backstory: The Fed has provided nearly $3 trillion in liquidity since March to reopen credit and financial markets, and corporate titans like Apple, Exxon Mobil and United Airlines have taken advantage, borrowing a record amount of money at rock bottom rates.

  • The lone lifeline for small businesses has been the Payroll Protection Program, which economists have found to be inefficient, ineffective and insufficient, largely excluding the businesses most in need of assistance.
  • In particular, businesses with Black, women, and immigrant owners have disproportionately been shuttered because of the virus.

By the numbers: A recent survey by the National Federation of Independent Business found that 22% of PPP recipients anticipate having to lay off at least one employee or have already.

  • In a separate survey, 23% of small businesses told NFIB they would be able to operate under current economic conditions for no more than six months. Another 21% said no more than a year.
  • "It’s a bleak picture," Holly Wade, NFIB's director of research and policy analysis, tells Axios. "It’s terrible."

A recent survey of U.S. chief financial officers found the difference in outlooks between small and large firms over the next 12 months "is extreme."

  • Expectations at small businesses "have essentially collapsed," says Keith Parker, global equity strategist at UBS Research.
  • Conversely, more than 60% of large firms with sales over $2 billion expect sales growth to accelerate — 49% expect a "significant pickup."

The big picture: The pandemic has ushered in an evolution in business akin to the development of the internal combustion engine or the dot-com bubble crash that accelerated globalization and second generation internet companies, Mohamed Kande, U.S. and global advisory leader at PwC, tells Axios.

  • U.S. companies are making major investments in supply chain relocations out of Asia and closer to home, as well as artificial intelligence and robotics and re-skilling workforces to operate remotely and autonomously.

The bottom line: "That will be a tough environment" for small business, Kande says.

  • "What happens when you have changes like that is you start to see a wave of consolidation. It’s hard for small companies to survive because they don’t have the balance sheets, they don’t have the capital to sustain a crisis for a long time."

Go deeper

Oct 22, 2020 - Technology

Exclusive: Survey reveals pandemic's toll on gig workers

Illustration: Sarah Grillo/Axios

More than two-thirds of gig workers have seen their incomes drop during the coronavirus pandemic, with almost a third cutting back on food as they struggle to cover expenses, according to new data from an industry survey shared exclusively with Axios.

The big picture: The pandemic has put ride-share drivers, personal shoppers and others at heightened risk of contracting the coronavirus without netting them benefits or additional pay.

Schumer says Senate will stay through weekend to vote on COVID relief

Senate Majority Leader Chuck Schumer (D-N.Y.) accused Sen. Ron Johnson (R-Wis.) of going to "ridiculous lengths" to show his opposition to a COVID relief package widely supported by the American public, after Johnson demanded that the entire 600-page bill be read on the Senate floor.

The state of play: Johnson's procedural move will likely add 10 hours to the 20 hours already allotted for debate, during which Republicans will propose amendments to force uncomfortable votes for Democrats. Schumer promised that the Senate will stay in session "no matter how long it takes" to finish voting on the $1.7 trillion rescue package.

Felix Salmon, author of Capital
1 hour ago - Economy & Business

What central bank digital currencies mean for crypto

Illustration: Aïda Amer/Axios

Central bank digital currencies, or CBDCs, represent the ultimate ratification of digital finance: Its adoption by the most venerated guardians of the international monetary architecture.

Why it matters: Crypto-evangelists often talk about CBDCs in awed terms. But it's far from clear that the bitcoin-and-ethereum crowd would ultimately benefit from money going digital.

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