Business closures surge by 200% as coronavirus hammers US economy, study finds
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Business closures throughout the U.S. surged by more than 200 percent in a span of two weeks as the coronavirus pandemic forces an unprecedented shutdown of the nation’s economy.
During the second and third weeks of March, when the majority of states implemented strict stay-at-home measures and directed businesses deemed nonessential to shutter to mitigate the spread of the virus, the closure rate of businesses skyrocketed by two to four times the previous rate, according to a report published Tuesday by Yelp.
Restaurants, bars, hotels, airlines, cruise lines, automakers and entertainment venues have been battered by the tandem health and economic crises as Americans increasingly stay at home.
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Since March 1, more than 175,000 businesses in the U.S. have shut down, either permanently or temporarily, Yelp found. That includes 48,000 shopping establishments, 30,000 restaurants and 24,000 spas and other beauty businesses.
One of the hardest-hit areas was bars and other nightlife venues, which saw an 81 percent plunge in consumer interest, Yelp found. Salons and other beauty businesses dropped by 77 percent, while hotels and travel businesses decreased by 75 percent.
“In 15 days, the economy transformed as much as it had in our prior 15 years of operation, combined,” Carl Bialik, Yelp’s data science editor, said in a news release. “This quarter has been unlike any other as businesses suddenly closed nationwide, consumer interest plummeted, businesses overhauled their business models, and workers and consumers changed lifelong habits overnight.
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Los Angeles saw the highest number of closed businesses, but was closely trailed by New York City and Chicago. In New York, the American epicenter of the coronavirus outbreak, the economic impact of the virus outbreak is akin to eight Hurricane Sandys, according to Yelp. Philadelphia and Miami had the lowest rate of business closures among major metropolitan areas.
Still, some businesses are unusually well-suited to meet customers’ needs while they stay at home. For instance, since March 10, fitness and exercise equipment has skyrocketed by 436 percent in shares of page views, reviews and photos. Cosmetic and beauty companies jumped by 139 percent and pizzerias are up 71 percent.
Plus, Americans stuck at home are increasingly turning to dining out options, according to the data: The ratio of searches for dining-in to dining out increased by 300 times in just a few weeks.
More than 26 million Americans, or about 16 percent of the nation, have filed unemployment claims since the virus outbreak forced a broad swath of the U.S. economy to shut down.
At the end of March, Congress passed the largest stimulus package in recent memory to insulate the economy from the virus, including establishing the Paycheck Protection Program. Businesses with fewer than 500 workers can use the low-interest loans to maintain payroll throughout the crisis — if at least 75 percent of the money goes toward staffing, the federal government will forgive it.
Time is of the essence for business owners: According to an April poll by the U.S. Chamber of Commerce and MetLife, 24 percent of small businesses expected to close permanently within two months or less as a result of the virus.
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