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Pandemic hammers small businesses vital to economic recovery

WINCHESTER, Va. (AP) — In a normal year, hundreds of book lovers would have descended on Winchester this summer for Shenandoah University’s annual children’s literature conference.

Some would have made their way to Christine Patrick’s bookshop downtown. Winchester Brew Works would have rolled out kegs this month for Oktoberfest revelers. The Hideaway Café, occupying a prime location at the corner of Cork and Loudoun streets, would be advertising its monthly Divas Drag Show.

But 2020 is no normal year. The literature conference, Oktoberfest and drag shows have all been cancelled — casualties, like so much else, of COVID-19.

The pandemic has hammered small businesses across the United States — an alarming trend for an economy that’s trying to rebound from the deepest, fastest recession in U.S. history. Normally, small employers are a vital source of hiring after a recession. They account for nearly half the economy’s output and an outsize portion of new jobs

“Small businesses are the engine of the economy,” said Ahu Yildirmaz, co-head of the ADP Research Institute, a think tank affiliated with the payroll processor ADP. “In past recessions, they were the ones really fueling the economy.”

Roughly one in five small businesses have closed, according to the data firm Womply. Restaurants, bars, beauty shops and other retailers that involve face-to-face contact have been hardest hit at a time when Americans are trying to keep distance from one another.

Small companies are struggling even here in a city of 28,000 that works hard to promote and preserve local enterprises. Founded in 1744 and fought over repeatedly during the Civil War, Winchester, 75 miles west of Washington, D.C., at the northern edge of the Shenandoah Valley, long ago blocked off several blocks to create a pedestrian mall downtown — a bulwark for local businesses that must compete against the big box stores on the outskirts of town.

To encourage foot traffic at local businesses, Winchester even designed traffic lights to make it easier to traverse downtown on foot than by car, sometimes to the consternation of motorists caught in stop-and-go traffic.

But city planning is no match for a global pandemic.

“We’re in such a weird, weird time,” said Mayor John David Smith Jr. “Small businesses and families are hurting.”

Some Winchester businesses folded quietly in the spring, he said, choosing not to renew their leases. One was The German Table restaurant, which closed in April with this explanation on its Facebook page from its owner:

“I am always a happy and positive person, but I really think that this virus will be kicking a lot of small businesses in the ass!! With no positive changes in sight, reopening in maybe 4-6 months seems almost unrealistic.”

Others are holding on. They’re receiving government aid and loans or readjusting their operations to reach customers online. Some are now offering curbside service and deliveries or are benefiting from residents who buy local to keep cherished Winchester businesses from going under.

When the pandemic struck in early spring, the American economy fell into a sickening freefall as businesses everywhere shuttered and consumers stayed home to avoid infection. The economy’s gross domestic product, the broadest measure of output, plummeted at a 31.4% annual pace from April through June. It was, by far, the worst three months on record dating to 1947.

Even though hiring partly rebounded as businesses began to reopen, the nation is still down 10.7 million jobs since February.

Lacking the credit access and cash stockpiles of larger companies, small businesses were especially vulnerable to the economy’s sudden stop. In a study in April, researchers from the University of Illinois, the University of Chicago and Harvard found that three-quarters of small businesses had only enough cash on hand to get by for two months.

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