Invest
US businesses to survive 3 months due to health pandemic
American businesses can only survive the impacts of social distancing measures for another three months, with the economy unlikely to see a rapid return to its pre-pandemic state.
US businesses to survive 3 months due to health pandemic
American businesses can only survive the impacts of social distancing measures for another three months, with the economy unlikely to see a rapid return to its pre-pandemic state.
If American businesses can go without profits and purchasing inputs, their cash reserves should be enough to see them through the economic shock of social distancing measures — but if lockdowns continue after that, it’s anybody’s guess.
“The COVID-19 outbreak has brought the US economy to a screeching halt as most states have issued social distancing guidelines, leading many businesses to sharply curtail operations, if not close down entirely,” said Wells Fargo acting chief economist Jay H. Bryson.
“If many parts of the country remain in a virtual state of lockdown for the foreseeable future, then many businesses will eventually run out of cash and they will be forced to close their doors for good.”
While businesses that were profitable prior to lockdowns have a decent chance of survival, owners may opt not to use their cash buffers if they believe the medium- to long-term prospects of profitability look grim and instead close their business down in order to reinvest in other opportunities.
“If this potential scenario were to occur on a large scale, then the pace of the post-pandemic economic recovery could be adversely affected until the cash resources are successfully redeployed in other business opportunities,” Mr Bryson said.
Cash reserves are also not evenly distributed among businesses, with many relying on measures put in place by the Small Business Administration and the Federal Reserve.
While those measures might protect some businesses, those that have already failed or will in the future won’t be resuming operations, with displaced workers likely to remain unemployed for some time.
“We look for the officially reported unemployment rate to skyrocket to more than 15 per cent in the near term and for it to remain higher than 6 per cent at the end of 2021,” Mr Bryson said.
“These lending programs may be able to keep many businesses afloat for some time, but they do not ensure that the economy returns to its pre-pandemic state in a quick fashion.”
Stock market
Emerging market equities gain traction in post-pandemic world
Emerging market equities are making a comeback as technology-savvy consumers flock to capitalise on new opportunities that the 2020 pandemic may have made too attractive to ignore. ...Read more
Stock market
Is it too late to start investing in market index ETFs?
With the Australian market recovering its losses since the pandemic began, nestegg asked an industry expert if it was too late for investors to begin their investing journey. ...Read more
Stock market
Is it time to buy reopening stocks?
Investors are being advised to look into stocks that could benefit from markets reopening, an analyst has stated. ...Read more
Stock market
Stocks to watch in 2021
Easing political uncertainty, new vaccine hopes, central bank’s willingness to do all it takes and more, and new stimulus packages are likely to act as tailwinds for investors, an analyst has said. ...Read more
Stock market
Australia’s October stock picks revealed
Australian retail investors piled predominantly into high-growth industries such as electric vehicles stocks, cloud computing and recent third quarter IPOs during the month of October, new research ha...Read more
Stock market
The US election created a ‘goldilocks scenario’ for financial markets
As the votes continue and the results are collated, the US election is increasingly likely to create a “goldilocks scenario”, an industry expert has said. ...Read more
Stock market
How a Democrats sweep could benefit the Australian market
As Americans go to the polls, a Biden victory could help Australia’s sharemarket, an investment bank has revealed. ...Read more
Stock market
What investors should do before the US election
As the election date draws near, investors are being urged to forget the “fireworks and noise” and focus on the long-term fundamentals when investing in the US. ...Read more
Stock market
Emerging market equities gain traction in post-pandemic world
Emerging market equities are making a comeback as technology-savvy consumers flock to capitalise on new opportunities that the 2020 pandemic may have made too attractive to ignore. ...Read more
Stock market
Is it too late to start investing in market index ETFs?
With the Australian market recovering its losses since the pandemic began, nestegg asked an industry expert if it was too late for investors to begin their investing journey. ...Read more
Stock market
Is it time to buy reopening stocks?
Investors are being advised to look into stocks that could benefit from markets reopening, an analyst has stated. ...Read more
Stock market
Stocks to watch in 2021
Easing political uncertainty, new vaccine hopes, central bank’s willingness to do all it takes and more, and new stimulus packages are likely to act as tailwinds for investors, an analyst has said. ...Read more
Stock market
Australia’s October stock picks revealed
Australian retail investors piled predominantly into high-growth industries such as electric vehicles stocks, cloud computing and recent third quarter IPOs during the month of October, new research ha...Read more
Stock market
The US election created a ‘goldilocks scenario’ for financial markets
As the votes continue and the results are collated, the US election is increasingly likely to create a “goldilocks scenario”, an industry expert has said. ...Read more
Stock market
How a Democrats sweep could benefit the Australian market
As Americans go to the polls, a Biden victory could help Australia’s sharemarket, an investment bank has revealed. ...Read more
Stock market
What investors should do before the US election
As the election date draws near, investors are being urged to forget the “fireworks and noise” and focus on the long-term fundamentals when investing in the US. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
