MNI DATA REACT: Chicago Fed:Cos Say Recovery Needs at Least 1Y

By Greg Quinn

     CHICAGO (MNI) - Three-quarters of firms say the U.S. economy needs at least

a year to fully recover from Covid-19, a Chicago Fed survey published Tuesday

shows.

     About half of the 670 respondents from the Chicago Fed district said the

recovery will take between one and two years. The other half was split between

the most extreme answers -- either a recovery in less than a year or one

requiring more than two years. 

     "Many of the small businesses we heard from -- especially those in the

entertainment, tourism, recreation, restaurant, and retail sectors -- are in

danger of financial distress," the report said. "Many businesses are facing very

difficult challenges that are unlikely to go away quickly."

     "Moderate" social distancing rules and limiting gatherings of 50 people

would create financial distress after three months for 88% of restaurants, 65%

of retailers and 38% of manufacturers, the survey said. 

     Chicago Fed President Charles Evans told reporters May 5 that some growth

may resume in the third quarter, and a worst-case scenario had become almost as

likely as an optimistic one. "Every business I spoke to is challenged," he said,

but they are responding with innovations to make it work, Evans said.

     Since then millions more Americans have filed jobless claims benefits, the

U.S. budget deficit swelled on the cost of temporary relief payments and health

officials warned about a second wave of outbreaks as states allowed some

businesses to re-open. Minneapolis Fed President Neel Kashkari said Tuesday that

"unfortunately this is really a long hard journey that we are on."

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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