'It's Insane, It's Quick And It's Devastating': CBS Business Analyst On Coronavirus' Economic & Employment Impact
FORT WORTH (CBSDFW.COM) - Businesses are struggling to survive with much of the country still under stay-at-home orders.
CBS 11 Consumer reporter Alanna Autler interviewed CBS Business Analyst Jill Schlesinger about the government's response to the COVID-19 crisis.
"In terms of SBA loans, we have seen a lot of people really angry that some major corporations are receiving this money over mom and pop shops within our community," Autler asked. "How did that work?'
"It did not work well," Schlesinger said. "The first round of Paycheck Protection Program loans was exhausted in 12 days. What we know now is that companies that had preexisting relationships with banks, not just depository relationships, but lending relationships, they did better. "
But Schlesinger said she would not characterize this action as nefarious.
"I think this was one of those situations where banks simply said, we know these folks, let's get them the money, we know they're legit, let's move on," Schlesinger said. "That's a problem because a lot of small businesses didn't get the money they needed."
She emphasized that in order to survive, brick-and-mortar retailers may need to innovate.
"It's clear they're going to have to reduce their footprint," Schlesinger said. "In 2019, 9,300 stores closed and there were 23 retail bankruptcies and that was in a decent year. What this year brings is really unknown."
Schlesinger predicted a bailout of the major airlines, but she also turned her attention to the oil and gas industry.
"I think it's going to be under an enormous amount of pressure," she said. "I wonder how some of the small-to-medium size companies are going to survive...even if we get to $20 to $25 an [oil] barrel, a lot of small producers will not be able to pay loan payments on all the debt they've accumulated at that level."
The conversation then pivoted to unemployment.
Over the course of five weeks, 26 million Americans have filed unemployment claims.
In Texas, at least 1.4 million people have already filed for unemployment, according to the Texas Workforce Commission.
"It's insane, it's quick, and it's devastating," Schlesinger said.
But the business analyst said it's difficult to say if reopening businesses will alleviate unemployment.
"Because as some areas of the country begin the reopening process, it's question of will people come back? If I open, will they come, essentially? We don't know the answer to that. Just because a store is open doesn't mean someone who is worried or an older person, someone over the age of 60, is comfortable," Schlesinger said.
Last week the Congressional Budget Office predicted the national unemployment rate will average 15% during the second and third quarters of the year.
"They believe by the end of this year, things will get a little better, but not a lot better," said Schlesinger.
The CBO projects unemployment could possibly fall to 9% by the end of 2021.