Logjam
If Congress is able to come to an agreement on a new round of stimulus, it’ll be none too soon, though I’m not sure they’ll be able to break the stalemate, despite reports over the last few days of a $908 billion plan in the works that could pass before the New Year.
Many companies have been put to the test during the nine months (so far) of the pandemic, between lockdowns, business restrictions, supply chain interruptions, employee health issues and more. While many small and midsize firms did receive aid in the first round of stimulus, much of that money has already been spent. What’s come through loud and clear is they need additional economic relief now to withstand the extended impact of COVID. And many are looking at the next 3-4 months as being the most devastating period of the pandemic on many fronts.
The nation’s GDP contracted by 32.9% at a seasonally adjusted annual rate in the second quarter – dangerously close to depression levels – and industries such as construction had to rely on a backlog of work to make it through some of the most difficult months.
Given all this, it wasn’t at all surprising that in the latest Marcum-Hofstra CEO survey, 68% of middle-market company CEOs saw passage of a new federal COVID-19 stimulus package as one of the three most important government policy initiatives for the incoming Biden administration. Economic concerns emerged as the top issue for CEOs when it came to planning for the coming year, followed by technology, availability of talent and access to capital.
Nor was it shocking that middle-market leaders were less optimistic than last quarter, with the coronavirus continuing to wreak havoc. Less than 1% of CEOs rated their outlook for 2021 as very positive – a 10 on a scale of 1 to 10 – down from 13.3% in the spring and 4.2% in the summer. Only slightly more than a third of CEOs rated their outlook as a 5 or higher, putting the great majority of CEOs in negative territory on business sentiment.
As far as COVID is concerned, 58% said they anticipate coronavirus will continue to be a significant issue for businesses next year, and 82% are taking precautions for the possibility of more lockdowns. I agree that things are likely to get worse before they get better.
Many CEOs are well aware they are going to have to continue to adapt how they do business. In retail, for instance, record Cyber Monday sales signaled how important it will be for all retailers to raise their digital game to survive. Consumers are doing more and more of their shopping online, and that trend is only going to pick up momentum in the future.
Fortunately, it does look like there’s some good news ahead. The pharma industry has managed to condense the typical vaccine timeline from as long as 10 years into just 10 months. We will most likely see a vaccine here in the U.S. as early as the middle of this month. Britain beat us to the punch, but if all goes well, we’ll catch up shortly and that should be a game changer for restaurants, hospitality, travel, events and other industries hit especially hard by the crisis. It could also mean that more children will be able to return to their (actual) classrooms, easing the challenges for both working parents and employers – not to mention educators – posed by hybrid and online school.
Many business leaders are also optimistic about the new Administration in Washington. In our survey, nearly 56% said they anticipate the policies of the Biden administration will positively impact their businesses. It was even reported this week that 40 of the largest companies in the country have gotten together to prompt Congress and the new Administration to resume collaboration on climate change – a hopeful signal that CEOs are seeing the potential for constructive change.
It may be a while before those policies have a direct impact, though. The challenge for every leader will be to find ways to keep their business resilient. If you need a sounding board, I encourage you to pick up the phone or send an email to your Marcum professional. The Marcum Year-End Tax Guide is out, and there are a number of suggestions for business owners worth discussing before 2020 comes to an end.
As the second wave of COVID-19 sweeps the country, Marcum has again moved most of our workforce, other than essential office services, to being fully remote. It was a disappointing decision for us as we tried, for many reasons, to keep all of our offices open, subject to local density regulations as well as recommended social distancing and safety protocols. But alas, the virus won, and we were forced back to WFH.
Just as a frame of reference, Marcum team members reported 27 cases of COVID-19 between the middle of March and October 31. For the month of November, another 27 cases were reported. Our reported cases doubled over the course of just one month. And the cases were in almost every location nationwide where we have offices and among all age groups. Fortunately, none of the cases were transmitted in a Marcum office and none have resulted in a fatality.
We hope to re-open our offices in mid-January, after the holidays are behind us, and hopefully we will get to the other side of the current spike that seems to be country-wide. Until then, you can find the Marcum team at the other end of an email, text or cell phone call.
Stay safe, stay healthy and remember, we’re all in this together!
