Category Archives: Economy

2021 Paycheck Protection Program Opens With New Reqs

Economy, , ,

The Biden administration has announced updated regulations for the Paycheck Protection Program in order to ensure funding reaches small business owners. The new regulations will limit loan applications under the program to businesses with fewer than 20 employees for the first two weeks of the new application period, which begins on February 24.

The new rules will also alter some eligibility requirements for applicants with felony records, outstanding student loans and uncertain citizenship status.

In a statement released by the White House, the administration said the revamped program is aimed at ensuring “equitable relief to hard-hit small businesses,” as well as rooting out waste, fraud, and abuse.  

Last year, the Small Business Administration and Trump administration officials came under criticism for approving loans to large corporations while blocking assistance to so-called “Main Street” businesses.

The PPP is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion aid program ratified by Congress last March to provide relief to business owners who have suffered significant drops during the corona crisis.

CEOs Optimistic About Future of US Economy

Economy,

According to a survey by Business Roundtable CEOs are cautiously optimistic about the economy over the next months. On the question of when CEOs believe their businesses will get back to normal, this is what they said:

  • 26% said their business either did not suffer during the pandemic, or that they have already recovered, or that by the end of 2020 they expect everything to go back to pre-pandemic levels.
  • 41% said they expect their business to recover during 2021.
  • 33% expect recovery in 2022 or later

Optimism about the future is often reflected in the hiring levels of companies. Those levels are back to the average levels of 11.5 points. Another indicator is capital investment, which is above average at about 25.2 points. Sales expectations are above average at 29.9 points, and CEOs expect GDP growth to reach about 1.9%.

The CEOs also said that a relief package from Washington would help there businesses and the economy in general.

GDP Sets Record for Growth During Q3

Economy, , ,

The annualized rate for the growth of the Gross Domestic Product (GDP) reached a record of 33.1% during July, August, and September. The historic growth came immediately after one of the worst slumps in history, the second quarter’s annualized shrinkage of 33.4%.

The see-saw like behavior of the US economy can be accounted for by the ravages of the coronavirus pandemic, which forced a lockdown during the second quarter which shuttered many businesses, causing widespread job loss and business closures. In June stay-at-home orders lifted and the economy began to re-open, accounting for the rapid rebound of the economy in Q3.

Yet, even such a strong rebound has not resulted in a full recovery, which some analysts believe could take years, especially since the rate of GDP growth is expected to significantly slow down during Q4 of 2020.

Much of the growth is attributed to money set loose into the economy via the CARES Act, which distributed $2.2 trillion to every eligible American.

“Not only was the US economy enjoying the immediate bounce as a result of economic re-openings, but it was basking in significant fiscal stimulus support schemes,” said Seema Shah, the chief strategist at Principal Global Investors. “Now, the path forward will inevitably be an uphill struggle.”

US Business Sees Fastest Growth Since February 2019

Economy, , ,

According to IHS Markit’s business growth saw a significant uptick in October, the best its seen since February 2019.

The IHS Markit composite output index registered at 55.5, up from 54.3, the best number it has produced in almost 9 months. The index of service industry activity also gained from 54.6 to 56, and the purchasing manager’s index for the manufacturing sector rose from 53.2 to 53.3.

The index is a gauge of month-over-month changes in activity, not a summary of overall output. A reading of 50 indicates no change in business activity, while anything above 50 is a positive change and numbers below 50 indicate an economic contraction.

Chris Williamson, HIS Markit chief business economist said that last week’s report indicates that the US economy “started the fourth quarter on a strong footing.”

Markit is almost unique in showing a V-shaped economic bounce-back due to the trend being fueled by the rebound in output. Most of the other indices of business activity indicate that economic output still remains significantly under the pre-pandemic levels.

Biden Reaches Out to Small Businesses

Economy, Politics, , , , , ,
Joe Biden courtesy of Gage Skidmore

The campaign for the Democratic nominee for president of the United States, Joe Biden, will create an initiative to deploy an advisory council on small businesses and entrepreneurship. The initiative includes John Hickenlooper, who is running for the Senate in Colorado; Andrew Yang, who, along with Hickenlooper, participated in the Democratic primaries; and the owner of a Miami-based empanada company.

Biden’s campaign will also place a group of four advertisements throughout Arizona, North Carolina, and Pennsylvania that will focus on business owners who have been hurt and are struggling due to the coronavirus pandemic.

The initiative and the ads are designed to contrast Biden’s concern with the actions of the Trump administration which the campaign believes did not do enough to help small business and handled the Covid-19 pandemic poorly.

Biden has often pointed to Trump’s mishandling of the pandemic and brought attention to the difficulties small businesses are facing with an emphasis on the challenges procuring Paycheck Protection Program loans.

“The fact is that we’re in a situation where right now an awful lot of small businesses, 50 or fewer employees, are going out of business because the $2 trillion in the acts that are passed by the Congress aren’t getting to them at all,” Biden explained at a fundraiser.