Thinking about the Restart
Recently Goldman Sachs Research on Thinking about the Restart presented. As the corona crisis continues to weigh on the growth outlook, attention has turned to how the global economy will restart. Optimists think the apparent peaking of new active cases globally will allow economies to reopen soon, while pessimists’ counter that continued social distancing will be necessary to hold off a large second wave of infections.
Even if “business as usual” is off the table until a vaccine is ready, a sharp increase in testing and changes to business practices could bring back part of the lost output in sectors like manufacturing and construction, which account for about half the total hit to GDP in April by Goldman Sachs Research estimates. If policymakers manage to thread the needle between continued virus control and a gradual reopening of the economy, the level of GDP should begin to move higher in the months ahead.
The economic shutdown due to the coronavirus pandemic is creating unprecedented challenges for small businesses. “I think if you talk to any small business owner, we all have the same pain point, and that’s cash flow, full stop,” said Erin Andrews, owner of Indi Chocolate, a Seattle-based chocolate factory.
Andrews spoke during a recent episode of our Exchanges at Goldman Sachs podcast, in which we talked with graduates of Goldman Sachs’ 10,000 Small Businesses program. "Everybody is pretty shaken up,” said Matt Jozwiak of Rethink Food, a New York City-based non-profit, “The people who drive the trucks, the people who cook the food, our partners, and also my family and my fiancée."
But on a more positive note, Jozwiak said he’s encouraged by the increased sense of community, a thought echoed by Andrews. "We’ve had so many people come out to help, including our customers who have bought online,” Andrews said.
“That really helps us keep our doors open, and I’m extremely thankful for that.” Also in this episode, Margaret Anadu, head of Goldman Sachs’ Urban Investment Group, explained the firm’s recent announcement to commit $500 million in capital for emergency loans to small businesses, which raised the firm’s total commitment to COVID-19 relief efforts to $550 million.
In a recent episode of Talks at GS, Goldman Sachs Chairman and CEO David Solomon spoke with Jovita Carranza, administrator of the U.S. Small Business Administration about the federal government’s most recent relief efforts for small businesses (listen here).
Carranza pointed to federal relief offered through the Pay check Protection Program (PPP), a loan program to help small businesses keep workers on their payrolls. “We say ‘small’ business, but you are such vitality in this economy, you represent half of the GDP,” she said to small business owners who dialled into the call. “That's why we are so dedicated and focused on making this PPP a success.”
