GOODBYE, SMALL BUSINESSES. More than 110,000 U.S. small businesses closed for good during the first weeks of the U.S. economic shutdown, according to an April study by the National Bureau of Economic Research.
The survey, made as the shutdown’s full force was beginning to be felt, also found that:

  • 43 percent of businesses were at least temporarily closed;
  • businesses surveyed had cut their workforces by an average of 40 percent;
  • the typical small business had more than $10,000 in fixed monthly costs and less than one month’s cash on hand;
  • many businesses seeking CARES funding and PPP loans experienced major difficulties in applying.

Small businesses already were on the edge before the shutdown was mandated.
In September 2019, JPMorgan Chase reported that:

  • 29 percent of small businesses overall were not profitable;
  • 47 percent had cash to survive only two weeks or less.

Before the pandemic, small businesses supported 44 percent of the American economy and employed 20 percent of the U.S. workforce, according to the U.S. Small Business Administration.
“We are seeing a complete wipeout of a cohort of entrepreneurs and young firms,” John Lettieri, cofounder of the Economic Innovation Group, a Washington research firm, told The Atlantic magazine, “and there’s nothing coming up behind them.”
REAL ESTATE INVESTMENT CRASHES. Investments in real estate during 2020’s first half fell 45 percent year-on-year throughout the Asia-Pacific region; 36 percent in the Americas; and 19 percent in Africa, Europe, and the Middle East, according to Savills, a London-based brokerage.
Investments probably will “remain well below pre-pandemic levels for the rest of 2020 as investors wait for market clarity,” said Simon Hope, Savills head of global capital markets.
END OF THE URBAN RENAISSANCE? For two decades, cities have been the places where young professionals congregated and social innovation flourished. Now three factors may doom the urban renaissance:

  • the fear of viruses spreading rampantly among densely packed populations;
  • social unrest and disruption sparked by seemingly intractable police excesses;
  • cities’ budgets, crushed by the costs of the pandemic and economic shutdowns, may take decades to return to pre-pandemic spending levels and address rising problems such as housing affordability and homelessness.

Analysts predict cities will remain magnets for talent and energy but more of urban areas’ dynamism will migrate from city centers to outlying areas.
CALIFORNIA RESOURCES GOES BANKRUPT. The state’s biggest oil and gas producer has filed for Chapter 11 protection, citing the global oil glut and the economic shutdown’s impact on demand.
The company was spun out of giant Occidental Petroleum in 2014 with “a balance sheet designed for $100 oil,” said Raymond James analyst Pavel Molchanov. But soon after the spin-off, oil prices began to slump and the company has been struggling to avoid bankruptcy since then.
California Resources’ other major U.S. producers, Chesapeake Energy, Extraction Oil and Gas, and Whiting Petroleum will go bust in the shutdown. Eighteen smaller producers also have declared bankruptcy, with analysts expecting more to follow.
MALL OWNER MISSES MORTGAGE PAYMENTS. Triple Five Group has missed the last two payments on the $16-billion mortgage for its three-million-square-foot Mall of America in Minnesota and is negotiating for easier terms, according to Trepp, a real estate data firm.
The company also owns the $5.7-billion American Dream mall in New Jersey, which holds an artificial ski slope and theme park with a water park on the grounds. The center, which began opening last October and was shut down by state lockdown orders in March, is at least $2.8 billion in debt.
Some of the malls’ tenants have gone bankrupt during the shutdown, leaving empty storefronts. The Mall of America reopened on 10 June. The American Dream mall remains closed.
BRUIN E&P FILES CHAPTER 11 BANKRUPTCY. The Houston-based oil producer, which has focused on shale reserves in North Dakota’s Williston Basin, came to bankruptcy court on 17 July with a plan that gives nearly all of the company’s equity to its senior lenders.
The deal, approved by two-thirds of Bruin’s creditors and shareholders, will wipe out $840 million of the company’s $1.1-billion debt.
BRITISH FASHION INDUSTRY HEMMORAGES JOBS. The British fashion industry will lose about 240,000 jobs, or 27 percent of its 890,000-strong workforce, by 2022 because of the global economic shutdown, the British Fashion Council predicted.
About 80 percent of the vanishing jobs are expected to be in retail.
Knock-on losses through the supply chain could raise the total to 350,000, or about 1 percent of the U.K.’s workforce. The sector’s revenues are forecast to drop from last year’s £118 billion to £88 billion in 2020, with the industry’s GDP falling from £35 billion to £26.2 billion.
The shutdown has kept workers home, where “office attire” is t-shirts and cargo shorts and canceled weddings and other events that usually require new clothes. As a result, the shutdown has hit the clothing industry “twice as hard” as the U.K.’s economy in general and erased a decade’s worth of the industry’s revenue growth, the council said.
Burberry, Britain’s largest fashion brand, announced 500 job cuts on 1 July; Mulberry, the 50-year-old handbag company, is cutting 400 spots. Retailers Harrod’s, John Lewis, and Topshop also have begun cutting hundreds of jobs.
PEPSI SALES DOWN, SNACKS UP. Stronger sales of Frito-Lay and Quaker Oats brand snacks offset a drop in soda sales for PepsiCo Inc. during the second quarter.
Pepsi’s pop sales fell as restaurants remained closed and people made fewer trips to convenience stores.
However, people locked down at home stocked up on familiar comfort snacks, such as Cheetos, Doritos, and Tostitos.
PepsiCo’s revenue fell 3.1 percent year-on-year to $15.95 billion in the second quarter. Net income was $1.65 billion, compared to $2.04 billion last year but still outperformed analysts’ expectations.

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