The ongoing COVID-19 pandemic has hit the U.S. economy hard and the fallout on several economic sectors remains dire, according to a report released Wednesday (Nov. 4) by the U.S. Census Bureau.
The report looked at how social distancing and safe-at-home practices have brought catastrophic declines to industries such as transportation, entertainment and child care through the first half of 2020.
Perhaps none was hurt more than the airlines as this sector experienced revenue declines of 17% in the first quarter, escalating to 78.5% deficits in the second quarter as corporate travel and vacations were curtailed amid stay-at-home requirements. Transit and ground passenger transportation also slid off a cliff in the second quarter with declines of 40.4% in revenue on top of 9.1% lower sales in the prior quarter.
It was a mixed bag for trucking companies who move goods. Food and consumable manufacturers could not keep up with demand at retail while restaurant suppliers faced a major oversupply amid wholesale and foodservice operators. The trucking industry posted a 16.7% dip in second-quarter revenue after stable first-quarter results.
Courier and messenger companies saw revenue rise by 2.3% in first-quarter with gains of 6.4% in the second quarter. This was the only sub-segment in the transport industry that saw increased revenue during the COVID-19 shutdown.
The report shows each of these business segments has held steady revenue since early 2015, but the recession and the ongoing pandemic pushed losses to epidemic proportions.
Mark Vinter, a senior economist with Wells Fargo, said a stimulus package would help thousands of households that have lost income and small businesses on the brink of failure. He said there is some momentum in the economy that could carry it through the fourth quarter without a stimulus ahead of the holidays. He said a stimulus is crucial to helping the first quarter of 2021. Wells Fargo is modeling 5% GDP growth in the fourth quarter. Vinter said the job market could lose more momentum as the recovery process is dragging out longer than expected. He said many jobs lost have been in the restaurant and service sectors and there is more pain in the transportation and hospitality sectors to unfold.
Shipping giant Maersk plans to cut 2,000 jobs with other impacts to 27,000 jobs globally. American Airlines is cutting 20% of its workforce and furloughed 19,000 employees in the absence of another stimulus. United Airlines furloughed 13,000 employees and expects 16,370 jobs will also be impacted by cuts.
The entertainment, arts and recreation sectors have also felt serious consequences from the ongoing shutdown. Amusement parks and arcades saw a revenue decline of 19.1% in the first quarter. Those losses escalated to 81.1% in the second quarter, typically one of their busiest times of the year. Entertainment giant Disney said more than 11,400 workers at its properties in Florida will be laid-off on New Year’s Eve as tourism remains sluggish. The layoffs are part of the Walt Disney Company’s plans to lay off 28,000 employees in the U.S., due to prolonged closures at parks in California and limited attendance in Florida.
“Due to the continuing business impacts of the COVID-19 pandemic, we have made the very difficult decision to reduce our workforce,” Jim Bowden, Disney vice president of employee relations, said Nov. 2.
The Census report found the gambling industry suffered 12.3% revenue declines in the first-quarter with losses rising to 45.8% by June. Thousands of employees were furloughed in March as casinos closed in most states and while some have reopened the industry is not likely to recover anytime soon.
The performing arts industry saw revenue declines of 19% in the first quarter, expanding to losses of 66.1% in the second quarter. While this industry has not yet fully reopened the losses continue to mount.
The child care industry also saw revenue drop by 35% in the second quarter after being consistent for the past five months. Economists said parents opted to keep kids at home for safety reasons, even if that was an inconvenience for them trying to work from home. The industry is expected to see lower revenue through the balance of this year and many families are still working from home, according to the Census report.
One of the few industries to see growth in the second quarter was community food, housing and relief services. This sector largely relies on donations from private groups and public grants to provide assistance. As more families and businesses experience profound hardships during this pandemic, they have turned to relief and aid from this sector pushing growth 31.2% in the second quarter. The Census report said the private and public sectors have stepped up with funds to handle this growth thus far.
The Census report said the impacts are just beginning to be measured and although the duration and overall effects are still unclear, unprecedented revenue trends are likely for the balance of 2020 and into early 2021.