In our last monthly installment From a Main Street perspective, we revisited the 60,000 companies and 1 million active hourly employees using Homebase for insights into the state of the US economic recovery.
Here’s what we found.
How did Main Street fare in August?
The stagnation in July continued into August as Main Street faced persistently suppressed consumer demand due to ongoing public health concerns and capacity / opening restrictions.
Since last month’s report, Congress has not yet agreed on a stimulus plan, leaving Main Street alone to find ways to survive in an increasingly unpredictable period.
Additionally, there are concerns that Main Street may face seasonal headwinds as the traditional slowdown sets in at the end of summer, further exacerbating the already stagnant recovery seen last month.
The economic recovery of small businesses continues to stagnate
More than 20% of small businesses across the country remain closed, resulting in little or no improvement in economic indicators compared to July.
There is a slight slowdown in late August, which may indicate that the typical slowdowns begin towards the end of summer / back to school.
While some areas of the country still show improvements in employment and open businesses, declines in other regions have resulted in a net decline in aggregate activity.
Little to no improvement since late June
As in July, fewer people were employed at the end of the month than at the beginning of the month.
This month we also confirmed what we observed in July regarding the discrepancies between “early open” and “late open” states: the “late open” states (NY, NJ) have the “early open” states ( TX) fully overtaken, FL) when “early open” states saw a decline in July and August.
It should be noted that despite geographical differences, the differences in economic impact at the state level are relatively small compared to earlier in the pandemic, especially considering how far each state (and the whole country) falls below pre-covid levels .
Effects on unemployment
In our data, the reference period in August improved by 2 percentage points compared to the reference period in July. Therefore, the Labor Statistics Office can report a slight improvement in economic activity, although the general trend has been largely flat.
Regardless, it is clear that the improvement from July to August is less than the improvement observed from June to July.
Below is the percentage of employees (during the sample period) compared to our January base:
- August: -21%
- July: -23%
- June: -27%
- May: -42%
- April: -60%
Seasonal headwinds can occur
In a typical year, economic activity slows towards the end of summer, when students go back to school and cooler weather limits outdoor spending. This could help explain the slight decline in late August.
If this seasonal pattern repeats this year, the conditions resulting from further job losses in the fall could worsen without further government support for Main Street and its workers.
How has home base data been validated?
We worked with a number of scientists and researchers to validate and improve the Homebase data. Here are some examples:
- The St. Louis Federal Reserve suggested this Homebase data could predict the job reports
- Researchers at Drexel used it Homebase data estimate the “true” level of employment
- A team used at UChicago and Berkeley Homebase data to show different effects in different groups
Questions or comments about our results?
Contact Homebase VP of Data & Analytics Ray Sandza and Senior Analyst Kevin Liang to learn more.
Homebase makes it easy for more than 100,000 small (but powerful) businesses to work with everything they need to manage an hourly team: workforce scheduling, timers, team communication, hiring, onboarding, and compliance. We are not human capital management. We are not HR software. We’re tools built for the busiest of businesses, so owners and employees can spend less time on paperwork and more time on the essentials.
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