Whereas the financial talks drag on, Predominant Road is on hearth: Stanford Enterprise Professional
As talks continue in Washington, DC over a new round of financial and economic incentives, Stanford Graduate School of Business lecturer and small business advisor David Dodson doesn't like what he does on Main Street or for the U.S. economy sees.
Dodson, who once ran for the US Senate in Wyoming and served as CEO and chairman of several companies including an auto parts dealer and freight forwarding company, told CNBC that the fourth quarter is a must for many Main Street owners and retailers The lack of progress in stimulus measures could lead to another wave of bankruptcies, causing significant damage to the economy.
"We knew in April that the bridge we were building wouldn't take us to the other side. We wasted five months in an electoral process. … we have an emergency on our hands. It's make-or- Break "For small retailers," he said.
Retail is entering the crucial fourth quarter, which includes vacation sales, which for many is the largest period of annual sales. "If things don't go well, it could have an impact on the rest of the economy," Dodson said. "The 850,000 Covid-related bankruptcies we saw last summer are going to look like nothing."
While some economic indicators have improved, the U.S. economy is showing signs of a slowing recovery from the Covid recession.
Dodson said while politicians argue over financial and economic relief, retailers must make important decisions about inventory.
"You can't wait until November to decide how much inventory to order," Dodson said. "You have to do this now."
The economic impact of retail doesn't just affect the struggles of the smallest stores on Main Street. Even the destinations of the world hire janitorial services, snow plow services, window cleaners – small businesses. So the ripple effect of a bookstore is big (when added to all other small retailers), but the impact on small businesses is also profound when a larger retailer goes, Dodson told CNBC.
Dodson sees a situation that continues to let business owners down. "At breakfast, (Fed chairman) Powell tells us we have an emergency on hand, and at lunch, Trump says, we just wait until after the election and at dinner we have a new bill on the table."
Powell said in Congressional testimony this week, "Too little support would result in a weak recovery and create unnecessary trouble for households and businesses. … Over time, household and household bankruptcies would increase."
The fourth quarter is a hallmark of small business owners in retail, and the lack of economic momentum from Washington D.C. could lead to another massive wave of bankruptcies on Main Street.
Noam Galai | Getty Images
Karen Kerrigan, President and CEO of the Small Business & Entrepreneurship Council, said in a statement following Trump's tweet on Tuesday that talks were on hold until after the election: "To close the door and negotiate a COVID-19 relief Removing the recovery package means closing the door to the vital support of small businesses and their employees. If you do nothing, it will lead to a painful outcome for local economies across the country … if you step away from the negotiating table, it means for moving away from Main Street and our country's small businesses. The shutdowns of millions of small businesses are at stake. "
Trump later tweeted that he was in favor of certain aid programs, including for airlines, small businesses, and direct stimulus checks for individuals.
Dodson said the April first round of the paycheck protection program was a relief for many small business owners and kept them in business, but they have needed more visibility since then and the federal government has failed.
"What is happening right now is these employers, these companies are on hold. They don't hire people, they don't expand, they don't buy inventory, they wait," Dodson said. "That's the problem. We need the economy to be active, but it's waiting for Washington to stop playing while Main Street burns."
Another round of PPP is under review, with changes to encourage use by business owners as part of the current business cycle talks. Confusion over the terms of the loan program, including forgiveness, was cited as a reason that funds from the first round of the program were not exhausted in the spring and summer.
Small and medium-sized businesses continue to monitor Washington for any possible incentive with fear and frustration.
"Small businesses have waited far too long for the relief they need, and the aftermath of the delay has resulted in hundreds of thousands of closures, affecting jobs and the economy. This is no time for political brinkmanship," said Amanda Ballantyne, executive director from Main for Small Business Advocacy Street Alliance said in a statement.
While small businesses have become more optimistic about their chances of survival since the worst nationwide shutdown in the spring, polls show that many remain concerned about getting enough business through social distancing efforts.
"We can't do that anymore because once the retail sector collapses, the suppliers are hit by retailers, then the real estate industry is hit, and then the banking industry is hit, and then you have a system failure in the economy," Dodson said.
He says arguments by conservatives, including President Trump, that the local government has mismanaged aid and that more federal incentives will go to "blue states" miss the point about local government as the key to economic growth.
Local government accounts for 17% of the economy. This includes everything from buying football uniforms for schools to buying fire trucks and sewage projects that employ several small businesses.
"This is a huge industry that has grown 5% annually for the past decade," he said, and while adding it is fair to argue about whether public spending has risen too much due to a stalemate from another boost will hit the small business that sells the soccer uniform and permeate the economy.