At the beginning of the COVID-19 pandemic, researchers on our Regional Economic Analysis team and in our Consumer Finance Institute reached out to businesses in our District and consumers across the U.S. to see how they were faring amid business closures and mandated shutdowns. Surveys are one way the Philadelphia Fed promotes a strong recovery by collecting data that can help policymakers, other decision makers, and the public understand changes happening in the economy.
Taking the Pulse of Businesses in Our District
As the pandemic began to impact business activity, our researchers quickly realized they needed a way to gather information from businesses in the region more frequently than through existing monthly surveys. “We wanted to ask questions specific to the pandemic and find out how firms were responding to policies like stay-at-home restrictions and the CARES Act,” explained Elif Sen, senior economic analyst.
At the end of March, Elif’s team launched the COVID-19 Business Outlook Survey, a weekly touchpoint with firms in the Third District. Unsurprisingly, the survey showed that businesses experienced fairly large declines in new orders or sales and that these declines were sharper for firms that rely on face-to-face interactions, such as those in retail and hospitality. The survey also revealed that an overwhelming majority of respondents — averaging 84 precent — had applied for a Paycheck Protection Program (PPP) loan.
After 16 weeks, conditions seemed to stabilize, and the survey moved to a monthly format for three months. After that, the team folded the main question into its long-standing regular monthly surveys of manufacturing and nonmanufacturing firms.
It’s clear that businesses will feel the effects of the pandemic for a long time.
– Elif Sen
Since then, survey responses have shown some improvements. By early fall, declines in new orders and sales had largely plateaued, and it appeared that firms were benefiting from PPP funding. But respondents continue to note difficulties and uncertainty. “It’s clear that businesses will feel the effects of the pandemic for a long time,” said Elif.
Connecting with Consumers
As state governors ordered shutdowns, our Consumer Finance Institute (CFI) launched one of the first national surveys to gauge how consumers were faring. According to Tom Akana, advisor and research fellow, the CFI COVID-19 Survey of Consumers immediately documented the magnitude of shocks to employment and income and the fact that those shocks were not distributed equally across the population.
Consumers with low incomes were substantially more likely to lose their jobs and to experience large declines in income. Subsequent editions of the survey found that while relief programs put in place by the CARES Act were in effect, concerns about making ends meet went down, but as those programs ended, concerns began to rise again.
As the pandemic progressed, the team added different questions that uncovered further trends. For example, as employees who’d been working from home were polled about returning to work on site, many reported difficulties arranging care for their children and parents.
Another important finding is that people with education loans seem to be more severely affected, reporting job or income loss more frequently, regardless of income, gender, or race and ethnicity. Tom points out that since minorities have been hit harder by the pandemic in general, this results in a “knock-on effect” for minorities with student debt.
The last survey of 2020 found that respondents reported improvements in employment and ability to work normal hours. However, incomes remained largely below pre-pandemic levels, the percentage of respondents seeking financial assistance remained high, and respondents’ concerns about future shutdowns and their employers’ ability to stay in business were growing. “We want to call out when the situation is improving,” said Tom. “But we want to emphasize that it’s still not good and many people are being affected.”