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The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

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June 18, 2020

Seven in 10 Firms Sought Financial Help during the COVID-19 Crisis

The coronavirus (COVID-19) pandemic has had a shockingly large and swift impact on the U.S. economy since mid-March. And the initial coordinated federal response to the virus was, perhaps, equally swift, as Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act by the end of March. Further evidence of the speed of this reaction is that one of its main programs—the Paycheck Protection Program (PPP)—began taking applications by the first week of April, and it took only 13 days to deplete the initial funding amount.

Some analysts have suggested that emergency financial assistance to firms may have had a hand in May's surprisingly strong employment report, although not all the feedback on the PPP has been uniformly positive.

To shed further light on firms' experiences seeking and obtaining financial assistance during the pandemic, we posed a battery of special questions to our Business Inflation Expectations (BIE) panel in June (the survey was fielded from June 8 to June 12).

We first posed two questions regarding whether firms have requested and received financial assistance since March 2020, and we actually borrowed these questions from the U.S. Census Bureau's Small Business Pulse Survey. We followed those questions up with two more questions asking what share of the financial assistance requested they eventually received and, of that, what share of the amount received did they expect to be forgiven.

As chart 1 shows, about 70 percent of firms in our BIE panel requested financial assistance of any form (ranging from borrowing through an emergency facility, from a bank, and even from family and friends) since March 13, 2020. A majority of the panel sought financial assistance from the PPP. Digging into these responses, we find that very few firms sought multiple sources of assistance. Of the firms seeking financial assistance, three quarters of them sought assistance from only one source, and another fifth or so made requests from two sources.

Many applicant firms appear to have been successful in obtaining funding. The inset in chart 1 shows that, on average, firms received nearly all (95 percent) of the funding they sought. Perhaps more interesting is that, for the most part, firms expect most of these loans to be forgiven.

Chart 1: Share of Firms Requesting Financial Assistance

We should note that it's important to keep in mind that our sample includes only firms with employees, and our panel modestly overweights larger firms (the average firm size category in our sample is 50–99 employees). Given the varied experience that some businesses (and especially nonemployer firms, or very small businesses without employees, of which there are more than 25 million), our results cannot necessarily be generalized to the larger universe that includes nonemployer businesses.

Given that an overwhelming majority of requests for and acquisitions of emergency funding came from the PPP, we focus our attention in chart 2 on small firms (those with 500 employees or fewer) and compare our results to the nationally representative sample of small firms from the Census Bureau's Pulse Survey. (The June survey from the National Federation of Independent Business found similar results.) Both the BIE and Census Bureau surveys found that roughly three quarters of small firms have requested financial assistance from the PPP since March 13 and that a little over 70 percent of small firms have received funding from the PPP (implying that a very low share of applications were denied). Although the Census survey stops there, our special questions ask about the amount of funding these firms received relative to their request. Small firms in the BIE panel received an average of 96 percent of the requested funding.

Chart 2: Comparison of BIE to Census Small Business Pulse

Nearly every survey respondent who received a PPP loan indicated that they expect it to be forgiven, which is interesting for two reasons. One of the stipulations for PPP loan forgiveness is the recipient firm's retaining or rehiring employees. Our results offer an early suggestion that most firms expect to be able to keep their headcount up. Second, it suggests that, as these firms begin to open up and recover from the pandemic, they won't bear the burden of loan repayment.

Analysts and the press often ask if PPP money is going to where it might be most effective (that is, to the firms that need the lifeline merely to survive). Although it's still too early to render anything resembling a verdict, we do have some tentative results that speak to this issue.

Last month, we asked firms in our panel about the level of pandemic-related sales disruption they have experienced, ranging from "no negative disruption" to "severe negative disruption." Of small firms that experienced little to no sales disruption in May, 69 percent applied for PPP funding. More than 90 percent of those applicants received assistance from the PPP (see chart 3). For the group that experienced more severe disruption to sales activity, 77 percent of these small firms applied for funding (and all applicants received funding). That still leaves nearly a quarter of small firms with significant disruption to sales activity that did not request PPP funding. (Our results do not indicate why a small firm under duress wouldn't seek assistance from the PPP.)

Chart 3: Financial Assistance Received and Sales Disruption

Overall, our results suggest (alongside data from the Census Bureau and others) that the majority of employer firms have requested some form of financial assistance during the COVID-19 pandemic. Firms report that most of those requests are being fulfilled and that they've received amounts close to what they requested. And—although these results are tentative as we are comparing results to firms' previous responses during a period of dramatic changes—it appears financial assistance is going to a greater share of firms that have experienced more significant disruption to their sales activity.

May 28, 2020

Firms Expect Working from Home to Triple

The coronavirus and efforts to mitigate its impact are having a transformative impact on many aspects of economic life, intensifying trends like shopping online rather than visiting brick-and-mortar stores and increasing the incidence of working from home. Indeed, many tech giants have already made working from home a permanent option for employees.

Working from home, or telecommuting, is not a new phenomenon. According to a survey by the U.S. Bureau of Labor Statistics (BLS), around 8 percent of all employees worked from home at least one day a week before the arrival of COVID-19. However, only 2.5 percent worked from home full-time in the 2017–18 survey period.

Working from home has surged in the wake of social distancing and other efforts to contain the virus, and this surge brings up a good question: How many jobs can be done at home? Some careful research by Jonathan Dingel and Brent Neiman indicates that nearly 40 percent of U.S. jobs can be done at home.

While this provides an upper bound, can does not mean will, so a natural follow-up question is: How many jobs willbe done at home? To get a sense of how many jobs and how many working days will beperformedat home after the pandemic recedes, we turn to our Survey of Business Uncertainty (SBU). To preview our conclusion, the share of working days spent at home is expected to triple after the COVID-19 crisis ends compared to before the pandemic hit, but with considerable variation across industries.

In the May SBU, we asked two questions to gauge how firms anticipate working from home to change. To get a pre-pandemic starting point, we asked panelists, "What percentage of your full-time employees worked from home in 2019?" And to gauge how that's likely to change after the crisis ends, we asked, "What percentage of your full-time employees will work from home after the coronavirus pandemic?" We asked firms to sort the fraction of their full-time workforce into four categories, ranging from those employees working from home five full days per week to those who rarely or never work from home.

Chart 1 summarizes firms' responses to these two questions. It also summarizes the responses by workers to questions about working from home in the BLS's 2017–18 American Time Use Survey. For the period preceding COVID-19, SBU results and the Time Use Survey results are remarkably similar. Both surveys say 90 percent of employees rarely or never worked from home, and a very small fraction worked from home five full days per week. As reported in the chart's rightmost column, about 5 to 6 percent of all working days happened at home before the pandemic hit.

Chart 1: Working From Home, Pre- and Post-COVID

According to the SBU results, the anticipated share of working days at home is set to triple after the pandemic ends—rising from 5.5 percent to 16.6 percent of all working days. Perhaps even more striking, firms anticipate that 10 percent of their full-time workforce will be working from home five days a week.

Overall, firms say that about 10 percent of their full-time employees worked from home at least one day a week in 2019. That fraction is expected to jump to nearly 30 percent after the crisis ends (well below the upper bound estimated by Dingel and Neiman). Chart 2 gives a look at firm's working-from-home expectations for major industry groups.

Chart 2: Working From Home at Least One Full Day Per Week, Pre- and Post-COVID, by Industry

The share of people working from home at least one day a week is expected to jump markedly in the construction, real estate, and mining and utilities sectors, presumably by granting front-office staff working-from-home status. It is also expected to jump markedly in health care, education, leisure and hospitality, and other services, possibly by relying more heavily on remote-delivery options (for example, online education and virtual doctor's visits). Firms in the business services sector anticipate that working from home will rise to nearly 45 percent.

For the industries we can match directly to American Time Use Survey statistics, the two data sources imply a similar incidence of working from home before COVID-19. For manufacturing, SBU data indicate that 9 percent of employees worked at home at least one day a week prior to COVID-19, and the American Time Use Survey indicates that 7.3 percent did so. For retail and wholesale trade, the corresponding figures are 4.1 percent and 4.0 percent, respectively.

To summarize, our survey indicates that, compared to before the pandemic, the share of working days spent at home by full-time workers will triple after the pandemic. Our results also say that this shift will happen across major industry sectors. These changes in the location of work are also likely to exert powerful effects on the future of cities and the demand for high-rise office space (more on that next month).

Regarding the long-run impact of the shift to working from home, there are grounds for optimism, including a potential boost to productivity—although if you're juggling kids at home and working from your couch or bedroom, we can understand if it's hard to imagine right now.


April 17, 2020

Businesses Are in Uncharted Waters

Inflation expectations in our April Business Inflation Expectations (BIE) survey fell to an all-time low (going back to October 2011) of 1.4 percent, plunging far below its next lowest level of 1.7 percent (most recently observed in February 2020). Perhaps unsurprisingly, firms have bigger worries on their minds. And our boss, President Raphael Bostic, agreed, noting on WednesdayOff-site link that "inflation at this point is not something I'm particularly worried about."

The drop in inflation expectations was not the only historical low that our survey results uncovered. Firms' assessments of current sales levels relative to what they consider "normal" levels fell precipitously. Recovering from the 2007–09 financial crisis and recession, this quantitative sales gap measure had slowly been moving toward zero (or "normal" sales levels) alongside solid gains in gross domestic product growth and previously strong job gains. However, that all changed in April. Our survey, which was in the field from April 6 to 10, showed an extraordinarily large decline in sales levels relative to normal—from 2.5 percent below normal in the first quarter to 32 percent below normal in April (see the charts). The decline in sales had an impact on firms of all sizes, but smaller firms reported a much larger hit to sales than did firms with more than 100 employees.

Our survey's special questions this month focused on the level of disruption the coronavirus outbreak was causing for southeastern firms. We asked participating firms to assess disruption to their business operations and sales activity, on a scale of "no disruption" to "severe disruption," and it's obvious that a majority of firms in our panel have experienced severe disruption to their sales activity (see chart 2). The table indicates how disrupted firms' operations and sales were. Among those firms experiencing severe disruption, current sales levels have been roughly halved relative to normal conditions. The results suggest that the disruption associated with the outbreak has not hit all firms equally. There is also some evidence of dispersion (reallocation) across firms, as a small share of firms that indicated they are experiencing low levels of disruption are seeing stronger-than-usual sales levels.

As firms continue to grapple with the unprecedented impact and uncertainty that the coronavirus outbreak has inflicted, we wanted to get a rough sense of how long they expect these unusual conditions to persist and how long they can weather the economic shutdown without seeking new sources of funding. The left-hand graph in chart 3 shows the cumulative distribution function (CDF) for how many months before business operations return to normal. The CDF on the right-hand side plots how long firms can continue to operate in the current environment without seeking additional funding to backstop operations.

The typical (median) response was an expectation that it will be about four more months for business operations to return to normal (though the tail is long, and about 10 percent thought a year or longer is in order). Perhaps the silver lining here is that the typical response was an expectation to be able to operate for another six months before needing to tap additional sources of funding. Assuming that much of the economic activity that has been shuttered begins to resume by the beginning of the fourth quarter and conditions do not deteriorate further, the "typical" firm in our panel should be able to continue to operate.

However, digging into the individual responses reveals some nuance in this relationship. The cross-sectional relationship between a business decision-maker's assessments of the length of time he or she can continue to operate without securing additional funding and the length of time before resuming normal activity carries a correlation coefficient of just 0.2. (This finding essentially means that survey respondents often had different notions of when they would be able to resume normal business operations and need to tap additional funding.) The typical firm expects to be able to resume normal operations about a week or so before they need to tap additional funding. And, perhaps more importantly, nearly 40 percent of firms in our sample expect they'll need to secure additional funding before their operations return to normal.

Finally, although inflation isn't the first thing on everyone's mind at the moment, we did ask firms about their price expectations (see chart 4). While roughly 60 percent expect to hold steady on prices over the next six months, roughly a quarter of the panel expect to lower prices, and just 15 percent expect to increase them. On average, firms expect to lower prices by 2.2 percent, and there appears to be a relationship between COVID-related disruption to sales activity and expected price declines.

Across many dimensions, the disruption caused by the current pandemic is without precedent. Many firms headquartered in the Southeast have indicated severely disrupted business operations and sales activity, disruptions that appear to have caused incredibly sharp declines in sales levels. The typical firm in the panel expects this disruption to persist at least through the summer months (which may foreshadow the likely shape of the recoveryOff-site link). And—though not a primary concern at the moment—inflation expectations are the lowest we've recorded in more than 100 consecutive months of conducting this survey. In many ways, we appear to be in uncharted waters.

April 13, 2020

Unpaid Absence from Work Because of COVID-19

As has been widely reported, the March employment report shed light on the early impact of the COVID-19 pandemic on the U.S. labor market. One telling number is the official unemployment rate, which tallies the share of the labor force made up of people out of work (but who are looking for a job) plus those who have been laid off and expect to be recalled. The official unemployment rate increased from 3.5 percent in February to 4.4 percent in March. My own preferred measure is the share of the working-age population who are unemployed, working part-time because of economic conditions, or outside the labor force but still want to work. This underutilization rate is featured in the Atlanta Fed's Labor Report First Look analysis of the U.S. Bureau of Labor Statistics (BLS) labor report. The First Look shows that this measure increased from 5.8 percent in February to 7.1 percent in March.

According to the BLS, people who did not work "because of the coronavirus" were supposed to also be classified as unemployed (on temporary layoff). However, relative to February, it appears that around 1 million more people were classified as employed but absent from work and not getting paid for "other reasons" (reasons other than illness, childcare problems, bad weather, being in school, etc.). If those people were instead counted as unemployed, then the unemployment rate in March would have been closer to 5.0 percent, and the underutilization rate would have been 7.5 percent. The data in the table below break down the various components of these measures, if you want to perform your own calculations.


March 2020

One-month change

Labor force






Part-time for economic reasons



Unpaid absence from work for other reasons



Want a job



Don't want a job



Note: Data represent thousands of people and are seasonally adjusted except for unpaid absence. People in the "Want a job" category include those who currently want a job but are not counted as unemployed. The "Don't want a job" category includes people not in the labor force who say they don't currently want a job (see here for more details). "Unpaid absence" includes those who have a job but are on an unpaid absence from work for an unspecified reason.

Source: BLS, Federal Reserve Bank of Kansas City's Center for the Advancement of Data and Research in Economics, and author's calculations

A few observations about the absence-from-work data for March. First, a marked increase in absence from work across occupations took place, in both paid and unpaid absences. However, being paid while absent from work for "other reasons" was disproportionately prevalent among professional occupations, likely reflecting those workers' relatively greater ability to continue to work remotely. Second, unpaid absence from work was disproportionately common among food-preparation and building-maintenance occupations, as well as jobs providing personal services—the types of occupations most directly affected by social distancing mandates.

The April BLS labor report (due on May 8) will provide a clearer picture of the depth and breadth of the impact of COVID-19 on the labor market, and it will be important to include unpaid absences from work in the analysis. In the meantime, I'm keeping a close eye on the weekly unemployment insurance claims data as well as other high-frequency surveys (such as this one from Gallup).