1 in 5 NY firms plan layoffs by July because of COVID recession, poll shows

One in five businesses in New York State expects to shed jobs by July as the coronavirus-induced recession continues, according to a Federal Reserve poll released on Wednesday.

The projected layoffs at small- and medium-sized companies across the state reflect pessimism about when the economy will begin to recover from the pandemic, said Fed officials who surveyed business owners in September and October.

The officials noted that the effectiveness of COVID-19 vaccines and the adoption of another federal stimulus package weren't known when the 9,693 business owners nationwide were questioned; 216 were from New York. Each owner employs between 1 and 499 people.

Among the New York businesses, nearly half said they expect no change in the size of their workforce through June 30 while more than 3 in 10 said they would add jobs. Results for Long Island weren't available.

The employment forecast was likely impacted by the sales outlook, Fed officials said.

Nearly half the business owners said revenue would fall further this year compared with 2020. Only 36% said revenue would increase, year over year, and 19% said there would be no change.

Asked to identify their biggest challenge, more than six in 10 businesses cited weak consumer demand for their products or services.

The poll results are representative of the views of entrepreneurs in Nassau and Suffolk counties, experts said on Wednesday.

"They are fairly reflective of what's going on in Long Island's downtowns," said Eric Alexander, founder of the LI Main Street Alliance, which represents 45 downtowns that are undergoing revitalization. "Businesses are struggling but they are committed to working through" the pandemic, he said.

Alexander said the prospect of additional government restrictions on nonessential activity is a big concern. "Regulations are the wild card. Many business owners don't want another loan, they want to earn," he said.

The owners' outlook may have brightened recently, said John A. Rizzo, chief economist for the Long Island Association and a Stony Brook University professor.

"Back in September and October [when the Fed poll was conducted], firms were thinking the first half of 2021 was going to be challenging because of all the uncertainty about the vaccines and further funding for small businesses," he said. "That explains the pessimism in terms of the first half of this year."

Rizzo added the poll results show that businesses are "gearing up, by hiring people in advance, for a much better second half of 2021."

The New York results of the Fed’s 2020 Small Business Credit Survey illustrate the pandemic's impact on an economy that abruptly went into reverse in March.

Nearly eight in 10 businesses saw revenue decline last year compared with 2019 and almost six in 10 issued pink slips to employees.

Fed officials said Paycheck Protection Program loans encouraged employers to keep staff and to bring back those who were furloughed. The federally guaranteed loans are made by banks and other private lenders.

Even so, about seven in 10 business owners said they dipped into their personal savings to pay the business’ payroll and other bills.

Sign up for COVID-19 text alerts at newsday.com/text.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.