The U.S. economy is setting records as Americans are forced to stay home due to the coronavirus outbreak, as millions are filing for unemployment and the Paycheck Protection Program is out of money.
As The New York Times reported Wednesday, the Commerce Department announced retail sales dropped nationwide by 8.7%—the largest drop since the government began tracking the data nearly three decades ago. The numbers also don’t capture the full impact of the coronavirus on the retail industry because most states didn’t shut down until late March or early April, meaning the numbers are probably worse than being reported.
“It was a pretty catastrophic drop-off in that back half of the month,” Sucharita Kodali, a retail analyst at Forrester Research, told the Times, adding that April “may be one of the worst months ever.”
Additionally, the $349 billion lending program for small businesses has run out of funds. Small businesses across the country were seeking funds from the program in order to pay bills and employees through the crisis. Economists and analysts warned when the bill was being debated that more than $1 trillion would be needed for the program.
Treasury Secretary Steven Mnuchin also said Wednesday that “by law, the Small Business Administration would be unable to issue new loan approvals once the programs experience a lapse in appropriations.”
Lawmakers on both sides of the political spectrum say more money needs to be added to the fund. Mnuchin is expected to resume negotiations to add $250 billion to the fund. However, talks have broken down in recent days about whether to refill the fund as Republicans propose, or make changes to how the money is allocated to businesses as Democrats want.
Democrats want to attach new restrictions to ensure the money goes to minority-owned businesses and other companies that are disadvantaged in the lending market. According to Natalie Cofield, founder of the NMC Consulting Group, black and minority-owned businesses haven’t had the same opportunities as white-owned businesses and that may be a good thing right now.
“Because of the fact that access to credit and the ability to repurchase credit has been something that has been kept from black businesses, we have seen a lot more businesses advertise and work around those issues,” Cofield said. “So you might see a black business using a food truck as opposed to a restaurant or operating a pop-up store, so they may not have the same overhead expenses weighing on them right now.”
Unemployment is also skyrocketing by the week during the coronavirus pandemic. More than 22 million people have signed up for benefits in the last month—another record. And in some places, the number may be higher. In Florida, people have had so much trouble signing up that paper forms were being handed out at a Miami unemployment office and Gov. Ron DeSantis replaced the head of the state’s Department of Economic Opportunity.
DeSantis was reportedly becoming increasingly frustrated with the lack of response from the unemployment office, but according to The Huffington Post, former Gov. Rick Scott made the site almost impossible to navigate on purpose.