A Tale of Two Streets in the COVID-19 Economy

Morning Consult

“It was the best of times, it was the worst of times…”

The famous opening line to Charles Dickens’ epic novel “The Tale of Two Cities” seems to capture aspects of the dual, divergent and exceedingly difficult COVID-19 realities we are facing in the United States today: Because of the virus, we are bearing witness to both the best and worst of times. Congress and the administration need to take note — especially during National Small Business Week 2020, where this week we officially celebrate the risk-taking and hard work of Main Street business owners.

The coronavirus has certainly taken its toll. The facts are clear – over 6.5 million cases and the heartbreaking loss of nearly 200,000 lives. The economic pain is also well-known by all, with $2 trillion in gross domestic product wiped outduring the first two quarters of 2020, 22 million jobs lost (42 percent of which have been regained) and hundreds of thousands of small businesses shuttered. One report estimates 3.5 million closures over the next two months, and possibly 7.5 million closures over the next five months. 

The uncertainty of what lies ahead adds to a level of anxiety that is only mitigated by the knowledge that our medical and first responders continue their relentless dedication to caring for the sick, while our best scientific minds are working to quickly deliver an effective vaccine. It is with all this in mind that we have hope that we will eventually return to a world that looks and feels just a little less anxious and a little more like the normal we knew not that long ago.

But times are clearly not normal. Wall Street for example, due to quick action by the Federal Reserve and Congress, has achieved a rather remarkable recovery from the depths of the stock market sell-off in March. Investor portfolios, even with a current breather, have largely recovered their losses, bolstered by a combination of fiscal and monetary stimulus. Here, it looks to be among the best of times.

But Wall Street is not Main Street, and it is Main Street that will ultimately determine the strength of the U.S. economy and a successful recovery.

Despite a commitment of more than $6 trillion of monetary and fiscal stimulus, all is not well, and in fact, far from it. Wall Street’s apparent success masks a harsh truth — businesses of all sizes, both public and private, and especially small and medium-sized businesses, are straining to survive. Although August’s jobs report shows continued improvement in employment, Main Street businesses, as noted above, are in jeopardy, as they operate in a world a void of typical customer interaction and where consumers are hanging tighter to their dollars. Sadly, the inability of Congress to find a way to compromise is seriously undermining business recovery, and along with that, sapping the entrepreneurial energy of many business owners.

For those on Main Street, it is among the worst of times.

The Fed attempted to address the dire need for capital among small-business owners with its “Main Street” lending program, but the result has been very poor given terms and rules that were not realistic for most small businesses. This speaks to the need for Fed officials, and others “designing” capital access and recovery programs, to engage with Main Street businesses and lenders to ensure their programs align with practical needs and conditions on the ground. 

More importantly, members of Congress must find a way to put partisanship aside for the sake of local businesses and the communities dependent on them, like they did at the beginning of pandemic — as eloquently mentioned by Kevin Hassett, former chairman of the White House Council of Economic Advisers, in an ACCF webinar. There appears to be clear consensus, for example, on retooling the Paycheck Protection Program by allowing for a second draw, easing some restrictions that have kept many small businesses from applying for a loan and expanding forgiveness to include personal protective equipment and cloud services expenses. Congress created this program on a bipartisan basis, and must now make it work more effectively for small businesses. There is no excuse for inaction!

The U.S. economy remains in a deep hole, and therefore, Congress and federal officials must look at a broad range of solutions to fuel recovery. A strong and resilient recovery needs an innovative approach and government leaders must consider a range of ideas. The proposed “Main Street Recovery Co-Investment Fund,” for example, being advanced by the SBE Council, would leverage the early success of investment crowdfunding by matching federal dollars with local investors’ capital to enable broad and inclusive small business support across diverse communities – urban and rural alike. 

Every effort must be made to convene the smartest business and policy minds to identify and implement sound economic, tax, fair trade and social policies, along with programs that boost local growth and entrepreneurship.   

True commitment, followed with timely action by government leaders to aggressively confront the challenges with which we are faced, will give us the best chance to write a tale of two streets, Main and Wall, that converge into the very best of times.  

Michael J. Roman is a nonresident senior fellow at the American Council for Capital Formation and president of CertainPoint Strategies LLC. Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.