‘A sudden and dramatic downturn’: Nevada County economy will be hurt for long time following coronavirus slowdown, expert says | TheUnion.com
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‘A sudden and dramatic downturn’: Nevada County economy will be hurt for long time following coronavirus slowdown, expert says

Sam Corey
Staff Writer
The former drive-thru window of Jimboy’s Tacos in Grass Valley sits unused as the business has closed for good and the building has gone up for lease.
Elias Funez/efunez@theunion.com

SUPPORTING SMALL BUSINESS

Nevada City Chamber of Commerce

Website: http://www.nevadacitychamber.com

Phone:530-265-2692

Grass Valley Chamber of Commerce

Website: grassvalleychamber.com

Phone: 530-273-4667

Grass Valley Downtown Association

Website: downtowngrassvalley.com

Phone: 530-272-8315

Sierra Business Council

Website: sierrabusiness.org

Phone: 530-582-4800

Nevada County Economic Resource Council

Website: ncerc.org

Phone: 530-274-8455

There are many unknowns swirling with the pandemic in which the nation currently finds itself.

Many don’t know when exactly residents will re-enter “normal” life nor how quickly that will occur, how our social norms will change, nor how government will reassess the importance of things like child care or health care.

But in terms of the overall economic impact, economists like Gary Zimmerman believe things will get worse before they get better.

Zimmerman, a Nevada City resident and former economist for the San Francisco Federal Reserve as well as a visiting professor at Vienna University of Economics and Business, believes the country entered a recession in March, and a stronger downturn is looming.

“I think the one thing you can say is it will be bad,” said Zimmerman. “This is such a sudden and dramatic downturn in the economy.”

While it’s unknown how many businesses will go under from the almost unprecedented economic slowdown, Zimmerman said of the about 26 million newly unemployed, about half worked for small businesses. The service sector particularly — including restaurants, bars, fitness centers, gyms, salons and barbers — are about to take a large hit, he said.

Data from 2016 shows that behind health care, government and retail, the biggest employers in Nevada County include the construction and service sectors.

Small businesses in Nevada County, which employ a disproportionate number of people, also proportionally generate the second-most tax returns in the state in comparison with small businesses from other counties, according to a report from SmartAsset.

Broadly, rural businesses will be hardest hit, particularly those that maintain a storefront, like bars, restaurants and retail shops, according to Sierra Business Council Vice President Kristin York. At this point, those that have found a way to stay “semi-open” are just trying to prevent permanent closure.

“Even the restaurants doing take out — they’re just trying to stop the bleeding,” said York. “It’s going to take a while for things to get back to normal.”

LOCAL ACTION

Local business organizations like the Grass Valley Downtown Association, the Grass Valley and Nevada City chambers of commerce, the Nevada County Economic Resource Council and the Sierra Business Council have been working with businesses to help them acquire federal loans and to provide support, however possible.

According to Downtown Association Executive Director Marni Marshall, the local groups have been setting up webinars and meetings for small businesses to help them acquire loans, and to help shift them to online resources and establish connections on the internet.

“We’ve been dealing with a ton of employers throughout this process,” said ERC Executive Director Tim Corkins. “We’ve been full speed.”

The Nevada County Board of Supervisors recently created a relief fund with up to a $100,000 challenge grant, meant to supply emergency funding for nonprofits and small businesses

But even with assistance, there will still be challenges.

As local economies likely begin to carefully and slowly reopen in the next couple weeks or months, returning to economically stable times will likely be difficult, said Corkins.

“We have an older population, they’re going to be very cautious,” he said. “The big question right here is, ‘When can we start opening back up?’”

MORE BAD NEWS

Survey data gathered between late March and early April from Main Street America — a network of about 300,000 small businesses from across the country — held some depressing news: of the approximately 30 million small businesses, about 7.5 million of them are at risk of going under within five months and 3.5 million risk the same fate in just two months.

Since early March, over half of the businesses surveyed saw their revenue decrease by more than 75%.

According to statistics from the think tank Data for Progress, the burden of the economic crisis will fall mostly on the young. Of those who have lost their jobs as of April 9, the majority — 52% — are under the age of 45. According to reporting by The Atlantic, Millennials are now facing a once-in-a-lifetime downturn — for the second time in their lives, and as such will be less likely to afford a home, acquire wealth and are more likely to be obstructed from entering the middle class.

Numbers aside, moving out of this situation, according to economist Gary Zimmerman, is no easy task, as he says the economy is now deeply intertwined with public health. That is, localities and states must be cautious about opening back up for fear of causing more spikes in coronavirus cases and deaths from the virus. There is no binary approach between opening up the economy and protecting public health; the two overlap, he said.

The idea undergirding that thought process “ignores the fact that this is really serious and you can’t have people working in close quarters and out shopping in close quarters,” said Zimmerman. In other words: “That’s a dangerous assumption in a world where people die.”

a way out of this?

According to Zimmerman, there’s very little that can save the economy at this point. Consumer spending, business investment and foreign investment have all withered due to the virus.

The only interventions can come from Keynesian economics, including a monetary policy where interest rates are low and a federal government that spends as much as possible.

“At this juncture, it really is the central banks and government sector around the world that are trying to step up,” he said. “That’s the only way to help keep things going.”

Zimmerman recalled that around 2008, someone suggested the free market alone help the country return to normal conditions. A colleague of Zimmerman’s said the country had tried that. The result: ‘It’s called the Great Depression,’ his peer said.

Government spending, that is quickly injecting money into peoples’ pockets, is the best fight against a deeper recession and depression.

“That keeps money in the hands of the public and they will spend it,” said Zimmerman. “They don’t have a lot of alternatives at this point.”

Unfortunately, due to the 2018 tax cuts for the wealthiest Americans, a $3 trillion government deficit is likely collateral damage this year, said Zimmerman.

Sierra Business Council’s Kristin York had another suggestion for Congress’ spending: carve out loans specifically for businesses with less than 50 or 25 employees, as businesses with 500 employees are quite unusual in rural regions, like Nevada County.

York also suggested that small businesses negotiate in earnest with their landlords, lowering rent in the short term and having businesses return that money and additional income from sales in the long term.

Many businesses need this assistance, according to the Main Street America survey, as 65% of businesses surveyed said they needed “penalty-free extensions on their expenses.”

On Friday, the Nevada City Chamber of Commerce issued a list of suggestions for how small businesses can negotiate rent with their landlord.

In general, York said businesses have a better chance of survival if they make the necessary cutbacks.

“There’s actually hope for most of them,” she said, “as long as they cut their expenses right away.”

Correction: a previous issue of this story misstated with which university Gary Zimmerman is affiliated. The Union regrets the error.

MORE IN THE SERIES

Regional housing trust fund in the works for Nevada County

Nevada County looks to emphasize smaller units

No fears of housing density among planning officials

COVID-19 protocols strain Nevada County homeless shelter’s budget

Tenants, landlords arrange payment options during COVID-19 eviction ban

Patchwork of tenant protections intact for now

The high cost of homelessness in Nevada County

Nevada City collaborates with county and nonprofits to move campers off Sugarloaf Mountain

Nevada County housing market sees increased demand, limited inventory

‘I may have now but I might not tomorrow’: No uptick in Nevada County homelessness amid COVID-19, but future concerns linger

Nevada County graduates consider options in wake of COVID-19

Nevada County students receive more than $800,000 in scholarships

Graduating seniors in Nevada county weigh financial, academic concerns for college

Career education program adapts to meet needs of students

‘I just want to play’: Players, coaches, ADs and officials eye safe, speedy return of high school sports

‘Should I jump into a career?’ Many questions remain for students, teachers and administrators as the future draws nearer

Nevada County middle schoolers, high school underclassmen unsure what to expect next year

Support systems for Nevada County teens go virtual during pandemic

Sierra College summer enrollment not slowing

‘The best they could’: Nevada County Superintendent of Schools reflects on the school year, ponders what’s to come this fall

‘I can’t see the bottom now’: Administrators consider where and whether to make layoffs amid revenue shortage

‘These kids want to ball’: Youth sports organizations grapple with tough decisions regarding COVID-19 safety

Hamstrung: Nevada County summer sports scene hit hard by COVID-19 pandemic

Nevada County theaters go dark for the year

Movie theaters struggle to cover rent, utilities in an industry that typically operates with narrow profit margin

‘Planning for all of it’: Nevada City Film Festival moves online for this year’s event

Nevada County’s music festivals look to virtual events to build community, recoup finances

For Nevada County musicians, the show goes online

Nevada County artists adapt, host online galleries, concerts and workshops

Street fair cancellations in Nevada City, Grass Valley a huge economic hit

‘We are the recovery; we are essential’: Nevada County Arts Council survey reveals artists, art organizations are struggling

Who’s zooming whom? Creativity among Nevada County artists in the pandemic era

Nevada County Arts Council receives $112K Tahoe Truckee Excellence in Education grant for new project

Nevada County nonprofit funding in jeopardy

Nonprofits struggle to serve clients during pandemic shutdown

Nevada County animal rescue groups see surge in fosters, adoptions

Nevada County’s thrift stores move ahead with reopening

Possible postponement, cancellation of Nevada County Fair would negatively impact several Nevada County nonprofits

Local nonprofits feeling the effect of canceled, postponed fundraising events due to COVID-19

Feeding Nevada County: Effort to help those hungry bolstered by partnerships between nonprofits (VIDEO)

Nevada County youth organizations adjust to public health requirements

Volunteer work faces changes at Nevada County nonprofits amid restrictions

‘Do you have reserves?’ Still much uncertainty over how nonprofits will fare in coming months, years

Government business continues in isolation during COVID-19 pandemic

Nevada County, cities collaborate to reopen safely

Wildfire prep in Nevada County continues virtually during pandemic

‘This is why we signed up’: Librarian, homeless shelter manager continue working during pandemic

Financial aid offers much-needed relief in western Nevada County for those who can get it

Grass Valley trims staff in response to COVID-19 shutdown

Nevada County: Staffing, service reductions not yet needed

Nevada County property tax on par despite pandemic

Nevada County health workers say they currently have sufficient supply of personal protective equipment

Hospice of the Foothills continues providing end-of-life care during COVID-19 crisis

Senior care facilities on lockdown during COVID-19 pandemic

Residents of Nevada County senior living communities staying connected

‘Continue to plan and prepare’: Hospital analyzes finances, anticipates federal funding to ensure financial stability

Nurses in Nevada County and the region talk about why they love their jobs

Nevada County not planning to release more detailed COVID-19 case data

Officials: Testing is key in calls to reopen in Nevada County, across California

Nevada County doctors change approach to providing care due to COVID-19

The trifecta: Public health experts recommend testing, contact tracing and supported isolation to phase into a reopened world

Investigating the impact: Lack of revenue, uncertain return date causes concern for arts and entertainment venues

Impacts of Idaho-Maryland mine to be revealed soon

Nevada County artists discuss how COVID-19 shutdown has affected them

‘The arts are essential’: Center for the Arts launches emergency relief fund

Real estate sales strong in Nevada County despite challenges

No slowdown seen in Nevada County construction industry despite COVID-19 lockdown

Nevada County government, home improvement and real estate representatives talk business during COVID-19

‘I’d like to place an order’: In light of COVID-19, the demand for home delivery services in Nevada County is at an all-time high

Grass Valley, Nevada City first to feel COVID-19 economic hit

See you soon? Small business owners struggle, but are hopeful for a brighter tomorrow in Nevada County

Nevada County businesses struggle navigating economic relief

Nevada County health care providers pivot on financial tight rope

‘A sudden and dramatic downturn’: Nevada County economy will be hurt for longtime following coronavirus slowdown, expert says

‘A recession, let alone a depression’: Western Nevada County businesses apply for federal loans, but most have yet to receive money

Nevada County businesses, governments, nonprofits navigate uncertain times, worry what’s ahead

RELATED RESOURCES

http://www.TheUnion.com/coronavirus

http://www.MyNevadaCounty.com/coronavirus

Coronavirus Guidance for Businesses/Employers

Nevada County Relief Fund for Covid-19

To contact Staff Writer Sam Corey email scorey@theunion.com or call 530-477-4219.


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