The Covid-19 toll on US business? 200,000 additional closures in Pandemic’s first year

The economic toll of the Covid-19 pandemic was difficult to measure, but new Federal Reserve estimates suggest it wasn’t as bad as it was feared for smaller companies.

The pandemic resulted in the permanent shutdown of about 200,000 US offices above historical levels during the first year of the viral outbreak, according to a study published Thursday by Fed economists. According to the study, about 600,000 branches per year have been permanently closed, or about 8.5%, in recent years.

According to the Fed economists, who surveyed companies with employees, individual companies are responsible for about two-thirds – or about 130,000 – of the additional closures if historical patterns persist. Other closed branches are units of large companies – a Gap or Pizza Hut, for example – that closed some locations while remaining in the business.

According to the Fed study, barber shops, nail salons and other personal service providers appear to be hit the hardest, accounting for more than 100,000 store closures above historically normal levels between March 2020 and February 2021.

Many small businesses continue to struggle to survive, but the new estimate suggests that the number of bankruptcies in the US was less than some economists expected. A previous study estimated that more than 400,000 small businesses closed in the first three months of the pandemic.

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