Simple Chart Shows How Much Small Business Continues To Struggle

The election results may appear to be good for markets, but coronavirus cases have crossed the 100,000-cases-per-day mark and are taking a major toll on small businesses.In a note from Torsten Sløk of Apollo Global Management, Sløk pointed out that the virus is preventing key behavior that benefits small business — especially people going to restaurants, bars, cafés and more.

“This continues to weigh on employment numbers for small businesses,” he wrote.The small business index plummeted in March, but it has continued a downward trajectory since recovering slightly in the summer as the virus ebbed somewhat and outdoor infrastructure was established in the warmer months.

“Given half of U.S. employment is in businesses with less than 500 workers and given the lower likelihood of additional fiscal support, this is a downside risk to nonfarm payrolls over the coming months, including tomorrow,” Sløk wrote. The Bureau of Labor Statistics will release the October employment report on Friday, Nov. 6.

This matched trends in ADP data that showed continued struggles for small businesses, which here are qualified as those with fewer than 500 workers.Sløk writes that the crisis for these businesses will not be over until the coronavirus crisis is likewise over, and the earliest would be mid-2021.

The reason why this affects small businesses more than large ones, Sløk told Yahoo Finance, is because small businesses don’t really get much financing in corporate bond markets. Large businesses can do so, and the Fed’s activity has supported these markets considerably. Small businesses, on the other hand, mainly get financing from banks — and banks have tightened their credit conditions, making it harder to get loans.

The corporate bond markets are much easier to tap than bank lending. (Apollo)

This has created a major divergence between small businesses and their larger counterparts. On the one hand, the corporate bond markets are strong. On the other, lending standards for banks are tight.

The U.S. Chamber of Commerce’s small business index has bounced back from a dismal Q2, it’s still behind confidence levels it had before the pandemic. The Chamber noted that small businesses saw the economy as their top voting issue in the recent election — consistent with many exit polls that said the economy was a greater issue than the coronavirus, even though Sløk and other economists see the two as one in the same. To wit, due to lowered economic and consumer activity due to coronavirus, which has cost over 234,000 lives, 60% of shuttered businesses will never reopen, according to Yelp.

At the same time, the National Federation of Independent Business announced this week that many small businesses were looking to hire but were having trouble finding qualified labor.

This is yet another instance of a so-called K-shaped recovery, where one group recovers much faster than the other. Just this week, Jefferies unveiled a new S&P 500 price target of 3,750 for 2021, showing a fairly bullish outlook for these 500 large American companies — especially given the likely election outcome.

Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.

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Neil Bradley of the U.S. Chamber of Commerce discusses concern about social unrest after the election, small businesses supporting an economy amid the coronavirus pandemic, and why the US Chamber of Commerce doesn’t support presidential candidates. #2020election#coronavirus#ChamberofCommerce Subscribe to Yahoo Finance: https://yhoo.it/2fGu5Bb About Yahoo Finance: At Yahoo Finance, you get free stock quotes, up-to-date news, portfolio management resources, international market data, social interaction and mortgage rates that help you manage your financial life. About Yahoo Finance Premium: With a subscription to Yahoo Finance Premium, get the tools you need to invest with confidence. Discover new opportunities with expert research and investment ideas backed by technical and fundamental analysis. Optimize your trades with advanced portfolio insights, fundamental analysis, enhanced charting, and more. To learn more about Yahoo Finance Premium please visit: https://yhoo.it/33jXYBp Connect with Yahoo Finance: Get the latest news: https://yhoo.it/2fGu5Bb Find Yahoo Finance on Facebook: http://bit.ly/2A9u5Zq Follow Yahoo Finance on Twitter: http://bit.ly/2LMgloP Follow Yahoo Finance on Instagram: http://bit.ly/2LOpNYz Follow Cashay.com Follow Yahoo Finance Premium on Twitter: https://bit.ly/3hhcnmV

Hospital Beds Filling, Bars Closing With Nearly All Threshold

Countries across Europe are imposing new restrictions as the second wave of coronavirus infections that’s swept across the region since summer-time has recently taken a turn for the worse—seeping into older, more vulnerable populations and driving a surge in hospitalizations.

Key Facts

All but three European countries—Cyprus, Finland and Norway—have reached the European Centre for Disease Prevention and Control’s (ECDC) coronavirus alarm threshold, which designates countries reporting above 20 cases per 100,000 residents on a seven-day average at high risk.

The ECDC’s most recent report, published last Thursday, also noted the rising death rate in Europe and identified sustained case increases in 27 countries, many of which are reporting more new infections than in the spring (though better detection methods play a factor). 

Among the countries faring the worst, the Czech Republic, reporting 22,179 cases and 158 deaths in the past week, enacted a second state of emergency Monday, while Madrid has entered a partial lockdown, barring non-essential travel to and from the city, as Spain reports nearly 10,000 new cases per day. 

France’s capital, which moved into a state of “maximum alert” on Monday as 30% of emergency beds in hospitals filled, leading to the closure of Paris bars and cafés, may be on the verge of tougher restrictions as the number of Covid-19 patients in emergency beds jumped to 40% on Tuesday. 

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Brussels, which has overtaken Paris and trails only Madrid in terms of infections per capita among Europe’s major cities, also announced it is shutting down bars and cafés in the city for a month on Wednesday. 

Meanwhile, a slew of other countries, including Ireland and Scotland, are mulling tough new restrictions.

Key Background 

While France, Spain, the Czech Republic and the U.K. are reporting higher numbers of new cases on average than they were during the peak of their spring outbreaks, the crisis isn’t as severe as it was through March and April. However, European authorities are concerned that rising infections, which have begun to spill into older populations, could soon bring hospitals back to the brink.

Crucial Quote 

“The enemy hasn’t been defeated yet,” said Italian Prime Minister Giuseppe Conte last weekend, calling on Italians to be careful as to avoid a return to stricter pandemic measures. Italy, once the centre of the coronavirus pandemic, was the first country in the world to activate a nationwide lockdown in March.

Further Reading 

“British universities re-open with students locked-down and forced to care for infected classmates” (The New York Times) 

“As Second Covid-19 Wave Rolls Through Europe, Deaths and Hospitalizations Rise” (The Wall Street Journal)

Full coverage and live updates on the Coronavirus/Follow me on Twitter. Send me a secure tip.

Jemima McEvoy

I’m a British-born reporter covering breaking news for Forbes.

 Jemima McEvoy

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There are mounting concerns the pandemic will cause a global recession. It has been another torrid day on the markets. Stocks plunged around the world, despite a coordinated effort by central banks to protect growth and jobs. Al Jazeera’s Neave Barker begins our coverage with a look at the situation around Europe. –

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