Persistent spikes in COVID-19 have led to a stall in U.S. small business activity

September 8, 2020 — Visa’s analysis of current economic data indicates that U.S. small business activity stalled in July as surging COVID cases stall revenue and employment recovery. 

Key highlights:

• The number of open small businesses at the end of July was 15.9 percent lower than the beginning of 2020, and was 3.9 percentage points lower than the end of June.
• At the end of July, small business revenue was 16.9 percent lower than the start of 2020, and was 2.6 percentage points lower than at the end of June
• The small business optimism index fell 1.8 points from June to July, mainly due to renewed restrictions related to an increase in COVID-19 cases.
• The net percentage of firms expecting a better economy or higher sales volume in six months fell 14.4 and 8.8 percentage points, respectively. Conversely, firms are more likely to expand employment and raise worker compensation.

Persistent spikes in COVID-19 throughout July led to renewed shutdown orders and fear among many consumers about going back out. This has led to a reversal in small business re-openings and revenue growth. As a result the recovery in small business employment also stalled.

— Travis Clark, Associate U.S. Economist, Visa Inc.

Optimism among small businesses slid in July after new spikes in COVID-19 infections rolled back the reopening process. Small businesses have become far less certain about the future due to the ongoing pandemic and the economic disruptions it is causing.

— Michael Brown, Principal U.S. Economist, Visa Inc.

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