Proper Recovery Will Occur after Vaccine Dissemination, Says GSU Economist
Georgia State Forecaster Says “Proper” Recovery Will Occur Only After Full Vaccine Dissemination
Rajeev Dhawan
ATLANTA–With vaccine rollout underway and picking up steam concurrent to emerging virus variants, Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s Robinson College of Business said recovery remains “an economic tango led by the virus. Reaching a sustained recovery by early 2022 is contingent on the speed and efficacy of vaccinations by mid-2021.”
“There is light at the end of the tunnel but it will take time, with ‘proper’ benefits to come as more people are vaccinated successfully,” Dhawan said. “We must relearn to walk before we can run again. This major biological shock rattled economic foundations.”
Assessing the past impact of stimulus payments, the forecaster pointed out that consumers spent them “rationally.”
“The most vulnerable who had to spend the checks last spring and this winter did so. Others who could afford to save, banked the funds or timed purchases to smoke out retailer incentives spurred by a Covid-19 sales slump in November and December.”
Consumer spending is beginning to return, with away-from-home food purchases up 4.4 percent, and sales of used cars and trucks up 10 percent year-over-year. Also rising: sales of watches and jewelry, which dropped 50 percent during the first two months of the pandemic. Today, watch and jewelry sales are up 20 percent over this time last year.
“Who’s buying all these watches and jewelry? We don’t know. But couples who have been confined together at home and perhaps postponed weddings, may be spending money they saved on peace offerings,” said Dhawan.
Proposed federal-level spending, immaterial of amount, will boost consumer spending for only a short while, followed by an inevitable reversion to the mean in subsequent quarters as stimulus funds run out.
“Real recovery will depend on people feeling comfortable interacting with each other – eating out, attending meetings, going to movies and concerts, and sightseeing,” said Dhawan.
Georgia and Atlanta did not take as hard a job-loss hit as the nation overall when the coronavirus shut down the economy in spring 2020. U.S. employment plunged 14 percent, compared to an 11 percent drop in Georgia. The area’s recovery also has been faster than the nation’s, which Dhawan attributed to Georgia’s relatively brief shutdown compared to the rest of the nation (notably California and Northeastern states).
“Today, the U.S. economy is down six percent by the employment metric, compared to only two percent in Georgia,” Dhawan said at a Feb 25 conference. “That sounds good until one takes a closer look at the performance of the state’s catalyst sectors of well-paying jobs, which is where job growth starts and the multiplier effect fuels downstream activity.”
The forecaster explained that the crucial catalyst sectors – corporate jobs, information technology, business services, manufacturing and transportation – experienced the same sharp eight percent drop in jobs in Georgia as experienced in the U.S. And when it came to recovery, Georgia has not outpaced the nation in this critical income generating category.
“Net-net, the overall job recovery deficit may be only 20 percent. But for high paying jobs it is close to 50 percent. Quality of jobs is a metric by which recovery still lags in the state,” said Dhawan.
One area where economic forces seem to be immaterial at the moment is homebuying, with more purchasers opting to buy single family homes further out instead of high-rise condominiums in the city’s core. How long this change in preference, or demand shock, will last is unknown.
“The rocket recovery of the stock market last spring that has continued into 2021, in conjunction with sharply falling mortgage rates, has helped consumers purchase homes.”
The Federal Reserve dropped its benchmark rate to near zero in March 2020, with subsequent quantitative measures to help shore up the mortgage market, making clear it will not raise rates until recovery fully takes hold.
“The Fed will stand pat until at least until 2023 or even later. But mortgage rates will start rising this year as the long-bond yield climbs in coming quarters. This is not just due to mild inflationary conditions expected from the consumer binge due to additional fiscal stimulus,” said Dhawan.
“The reason for a rise in bond yields is classic demand and supply of investable funds when looked at from a global perspective,” Dhawan said. “As we recover, and so does the rest of the world, rising demand for capital expenditures/investment spending by corporations that is a precursor to job growth will put upward pressure on mortgage interest rates.”
“Whether or not the housing boom continues and outlasts the coronavirus crisis hinges on stock market performance, which is a random factor in this recovery story,” said Dhawan.
Highlights from Rajeev Dhawan’s Economic Forecast
Nation
- Overall GDP growth will be 4.9 percent in 2021, 3.9 percent in 2022 and 2.9 percent in 2023.
- Investment growth will be only 7.2 percent in 2021, 5.4 percent in 2022 and 6.1 percent in 2023. Monthly job gains will be 298,000 in 2021, rise to 414,000 in 2022 and moderate to 202,900 in 2023.
- Housing starts will average 1.474 million in 2021, 1.339 million in 2022 and 1.272 million in 2023. Vehicle sales will average 16.7 million in 2021, 17.0 million in 2022 and 17.4 million in 2023.
- CPI inflation will be 2.3 percent in 2021, rise to 2.6 percent in 2022, and then moderate a bit to 2.4 percent in 2023. The 10-year bond rate will average 1.6 percent in 2021, 2.2 percent in 2022 and 2.6 percent in 2023.
Georgia and Atlanta
- Georgia will add 68,900 jobs (13,200 premium jobs) in 2021, gain a better 100,000 jobs (33,700 premium) in 2022 and increase by 77,100 (19,700 premium) in 2023.
- Nominal personal income will grow 4.0 percent in 2021, moderate to 0.6 percent in 2022 and rise 4.2 percent in 2023.
- Atlanta will add 54,000 jobs (11,900 premium positions) in 2021, grow by 86,600 jobs (29,400 premium) in 2022 and a further 64,900 jobs (17,000 premium) in 2023.
- Atlanta housing permitting activity will increase by 5.8 percent in 2021, decline mildly by 0.6 percent in 2022, then rise by 3.0 percent in 2023.
SBA Reaches $200 Billion in EIDL Loans to Small Businesses, Non-Profits
SBA Reaches $200 Billion Milestone in Economic Injury Disaster Loan Program to Small Businesses and Non-Profits
WASHINGTON –Today, the U.S. Small Business Administration reached a milestone in the success of the COVID-19 Economic Injury Disaster Loan (EIDL) program, which has provided U.S. small businesses, non-profits, and agricultural businesses a total of $200 billion in emergency funding.
Acting SBA Administrator Tami Perriello
“Following the enactment of COVID-19 emergency legislation, the SBA has now provided more than 3.7 million small businesses employing more than 20 million people with $200 billion through the unprecedented COVID-19 EIDL loan program,” Acting Administrator Tami Perriello said. “SBA remains committed to helping small businesses recover from the unprecedented economic effects of COVID-19.”
SBA is still accepting COVID-19 EIDL loan applications as the deadline to apply has been extended to Dec. 31, 2021. EIDL funding is used to pay fixed debts, payroll and expenses, accounts payable and other bills that can’t be paid because of the disaster’s impact. This financial resource has allowed millions of small business owners across America to retain employees, continue operating and support their communities during the COVID-19 pandemic.
The Georgia Association of Business Brokers has a number of bankers who have expertise in handling SBA loans. Locate one of GABB’s loan experts at our professional directory.
SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response. The SBA is strongly committed to providing the most effective and customer-focused programs possible.
As a reminder, the loan portion of the COVID-19 EIDL program continues to have funds available at very affordable and flexible terms, with an automatic deferment of one year before monthly payments begin. Every eligible small business and non-profit is encouraged to visit sba.gov/coronavirusrelief to get more information about applying for EIDL and other economic recovery programs.
The Georgia Association of Business Brokers has a number of bankers who have expertise in handling SBA loans.
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About the U.S. Small Business Administration
The U.S. Small Business Administration helps power the American dream of business ownership. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.
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SBA Approves Nearly $350 Million in PPP Loans in Georgia in January
ATLANTA – The U.S. Small Business Administration (SBA) approved nearly $530 Million in Paycheck Protection Program (PPP) loans in Georgia in the round of funding that re-opened in January.
The SBA re-opened the PPP Jan. 11 with $284 billion appropriated through the Economic Aid Act. So far in this round of funding, 7,706 PPP loans valued at nearly $530 million have been approved by the SBA in Georgia. As part of ongoing transparency of economic aid programs, the SBA recently released data summarizing loan approvals made through Jan. 24, 2021.
In the SBA Southeast Region – which serves Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee – more than 53,000 PPP loans valued at more than $1.7 billion have been approved.
Nationally, more than 400,000 loans valued at more than $35 billion have been approved this round. Overall, the average loan size is $87,000. Accumulatively, all PPP loans approved in 2020 combined with this round include more than 5.5 million PPP loans totaling $557.8 billion.
“This current round of PPP was designed to ensure increased access to funds for minority, underserved, veteran, and women-owned small businesses,” said Terri Denison, SBA Georgia District Director. “To address potential access to capital barriers, PPP access was initially granted exclusively to community financial institutions (CFIs) that typically serve these concerns. The SBA remains committed to assisting entrepreneurs in areas that may not have had an opportunity to utilize the program during round one of PPP as well as business owners that are prepared to apply for a second draw PPP loan to continue their recovery.”
The full Jan. 24, 2021 PPP Report includes national information on lender types, loan sizes, industries, and borrower demographics.
The data released in the report is a snapshot of the PPP loan portfolio as of Jan. 24, 2021. Any loan changes or cancellations made after this date will be not reflected in the report.
Approximately 4,500 lenders nationwide are participating in the PPP this round. PPP loans are made by lending institutions and then guaranteed by the SBA.
To best serve underserved communities – including minority-, women- and veteran-owned small businesses – the SBA has provided dedicated access to community financial institutions (CFIs) that specialize in serving these communities. At least $15 billion is set aside for PPP lending by CFIs which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs) and Microloan Intermediaries. The CFIs may be located (as well as all PPP lenders) by utilizing Lender Match.
While the PPP loan application expressly requests demographic information of borrowers so that the agency can better understand which small businesses are benefiting from PPP loans, the data reflects the information submitted by lenders to the SBA.
The SBA Georgia District continues to work in close partnership with the local SBA Resource Partner Network and expand on multilingual access and outreach about the PPP.
The deadline to apply for a PPP loan is March 31, 2021 or until appropriated funding runs out.
Updated PPP information – including forms, guidance, resources, lender information and data– is at www.sba.gov/ppp.
Information about all SBA coronavirus relief funding is available at www.sba.gov/coronavirusrelief.
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SBA Improves First Draw Paycheck Protection Program Loan Review
WASHINGTON – The U.S. Small Business Administration is taking steps to improve the First Draw Paycheck Protection Program loan review so that small businesses have as much time as possible to access much needed PPP funds. The Biden-Harris Administration is focused on ensuring small businesses receive the support they need to keep their doors open and continue to employ millions of Americans across the country. The Administration is working with the Agency to identify immediate solutions to address eligibility, compliance, integrity, and promote transparency.
While reviewing the initial draw of PPP loans, anomalies – mostly data mismatches and eligibility concerns – were identified in approximately 4.7% of the lender-submitted data. These concerns will require follow-up between the lender and the borrower so that borrowers can access a second round of loans.
The SBA is committed to working with lenders and eligible borrowers to provide the necessary information for follow-up and help get small businesses back on track so that they’re able to receive another round of PPP loans swiftly. The SBA encourages borrowers and lenders to work together as quickly as possible to resolve the issues. The SBA will automatically move favorable decisions to approval. During the newest round of PPP, the SBA has already approved over 400,000 loans for approximately $35 billion.
“Prior to this newest PPP round, the SBA supported 5.2 million PPP loan borrowers, providing more than $525 billion in economic relief to small businesses and other eligible entities,” said SBA Acting Administrator Tami Perriello. “The Agency is committed to making sure compliance checks are executed on the front-end. The SBA is also committed to addressing issues more efficiently moving forward, to ensure fair and equitable access to small businesses in every community.”
The SBA is immediately addressing the PPP loan review to allow for Second Draw PPP loan applications to be processed in an efficient manner by:
- Hosting a national call to brief lenders on the Platform’s additional detailed information that will assist in the resolution of First Draw PPP loan review and potential holds that impact Second Draw PPP loan application approvals.
- Equipping the Agency’s field team of lender relations specialists with information so they can provide support to lenders and borrowers in understanding the issues and facilitating the appropriate responses to resolve
- Providing additional guidance to PPP lenders on the review and resolution process.
Many Affiliate members of the Georgia Association of Business Brokers are working with the SBA and the PPP program. Find a GABB SBA loan expert here.
Through SBA’s 68 district offices, the Agency will work in close partnership with the Administration to further leverage its resource partner network and expand on multilingual access and outreach about the PPP. Updated PPP information, including forms, guidance, and resources is at www.sba.gov/ppp and at the U.S. Treasury Department’s www.treasury.gov/cares.
How to Resolve First Draw PPP Loan “Unresolved Borrowers” and Hold Codes: PPP Procedures Webinar Slide Deck
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SBA Bankers Discussed New Small Business Aid at Jan. 26 GABB Meeting
Bankers with expertise in handling SBA loans talked about applying for the next round of Paycheck Protection Program (PPP) funding at the Jan. 26 virtual meeting of the Georgia Association of Business Brokers.
A recording of the meeting is linked here.
GABB Affiliate Representative Kim Eells , Senior Vice President of SBA Business Development at Georgia Primary Bank, spoke along with Thomas Rockwood, Senior Vice President of SBA Lending at Atlantic Capital Bank and Cadence Bank Vice President and SBA Banker Ryan Stoll.
Here’s some PPP background from Kim Eells’ bank, Georgia Primary.
Thomas Rockwood’s bank, Atlantic Capital’s link, has this information.
Ryan Stoll’s bank, Cadence Bank, has posted this information.
SBA links to various Coronavirus Relief Options.
The Paycheck Protection Program (PPP) reopened the week of January 11 for new borrowers and certain existing PPP borrowers, according to the U.S. Small Business Association. This round of the PPP continues to prioritize millions of Americans employed by small businesses by authorizing up to $284 billion toward job retention and certain other expenses through March 31, 2021, and by allowing certain existing PPP borrowers to apply for a Second Draw PPP Loan, the SBA says.
PPPSD Revenue Reduction Documentation_2021_01_19
The SBA says a borrower is generally eligible for a Second Draw PPP Loan if the borrower:
- Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
Has no more than 300 employees; and - Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
- The GABB is the state’s premier organization devoted to buying and selling businesses and franchises, and operates the state’s only real estate school dedicated to business brokering.
For more information about GABB, please email diane.loupe@gabb.org or call or text 770-744-3639, or contact GABB president Judy Mims at judy@childcare.properties or 404-842-1997.
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