Nick slide, Denver branch executive with
the Federal Reserve Bank of Kansas City,
so great to have you back on the business.
Brief Ryan, it's great to be here
again today. Nick you and Co.
Author Bethany Green recently
released an article in the Rocky
Mountain economists looking at small
business recovery in Colorado,
New Mexico and Wyoming.
Can you share with us your key findings?
Yeah, I think Brian thanks.
I think one of the first things that
stood out to us is the unevenness
in the recovery that you see among
small businesses and some of the
other broader parts of the economy
is really when you started to see
the contract pickup and employment
coming back that we started to see
some manufacturing activities start to
pick up over the last year we didn't
see that same growth and recovery
among the small business community,
but we didn't really see it until the
latter part or the early part of this year.
So it was not until the spring
of 2021 that we started to see.
Employment really coming back
in a meaningful way,
but we started to see businesses
reopening in a meaningful way among
that small business community.
And so I think the first thing
that really stood out was the
unevenness in that recovery.
Now, one of the things I think that
is my key takeaway from that is
that the small business community,
regardless of industry and where we
are that the small business community
is a segment of the economy that's
particularly vulnerable to the path of
the pandemic in the path of the virus,
because that recovery really started
in earnest for small businesses.
When you started to see case
counts come down and remain low
for a while and you started to see
vaccination rates start to rise.
So this small business community,
I think being particularly
vulnerable to the path.
Pandemic is pretty important here
in Colorado because compared
to the rest of the nation,
we do have more employment and we do
have more small businesses as a share
of the total output of our economy.
So this is a particularly
important segment here in Colorado.
Yeah, now, according to your analysis,
Nick and I quote here,
the small businesses that are in the
Rocky Mountain region that remained
opened or were newly started were
not the same type that typically
drives significant job creation
and only recently has the number
of small businesses that employ
additional workers begun to recover.
End Quote.
What does that mean for further
recovery of small businesses in
Colorado in the Rocky Mountain region?
No, I I think this was was an important
part of what we found in the analysis.
We really found happening in the community
around us is at first it looked like
there might have been some traction
that small businesses were gaining that
it might have been some growth in an
activity there as you started to see
applications for new businesses pick up.
As far as perhaps a signal that
small businesses were maybe not fully
recovering the way they were before.
But we're transforming and able to
be part of that broader recovery.
But in fact what we found is that
many of those new businesses.
That were those applications that were
being filed and those new businesses
were being opened were in fact online
retailers and that was quite different
than many of the retail shops.
The small manufacturing outfits
that we happen to see,
or even the restaurants that we often have.
I mean they differed in a meaningful
way is the online retailers,
while providing an important
source of revenue.
When we had to socially distance,
it was a good alternative mechanism.
What you don't see is those online
retailers often employing a lot of workers.
On the other hand,
when you see the small manufacturing shop.
Retailer or the local business at the
at the end of the street when you saw
the the small leisure and hospitality
company that tends to employ those
four to five additional workers.
It has a small workforce that they bring
on and even grows during the summer months.
Those were not the types of businesses
that were really recovering and so
that's I think the first thing to say
is we we see the type of business
that was really starting to grow.
The new small businesses was that
those online retailers.
We didn't see those traditional
small business employers.
You know the engine of job growth
that we often find to be so important.
Our community that was not the part
of the of the small business community
that we saw growing. So what does that?
I think mean going forward?
It means that when we think about
that contribution from those,
the small business owners and and
the the few number of folks that
they each higher they add up to you
know close to 1/3 of the Colorado
economy of all employment.
They're really only starting to get
some traction with the recovery.
And so I think we want to monitor closely.
Out this segment,
this part of the small business
community is is responding to the
the changing conditions that we have
and the outlook for Delta and other
variants that are
out there, right? You know,
so many of us are obviously clearly
thinking about going forward.
You know, how can we continue to
support our small business community
as as we recover and at some
point hopefully you know we will
truly emerge from this pandemic.
What are you monitoring going forward
as you think about the outlook for the
small business community in Colorado?
And throughout the Rocky Mountain
region, yeah,
there's a couple of things that I'm really
trying to listen for in to look for.
I think first the most important
thing is to hear from the small
business community directly.
And what is it that they're telling us?
Because I think they are going
to be the most forward looking,
especially compared to any of the
other data or narratives that we
actually see sitting out there.
And the things that I could starting
to hear from them is that now when
restaurants are in fact open,
they're not able to be fully seated
because there's fewer people coming in.
We're starting to see demand.
Come back in a little more hesitation
and this is at a time when it's
the easiest to sit outside just
because we have the weather.
It's the easiest to to convene at that
vaccination rates have never been higher,
and so I think we're listening to that.
The change in demand from
small business owners,
other stories like gyms and other
spas and health care facilities
where you start to see what's the
appetite that they that their
consumers have for coming back in.
And so the first thing we're
listening to is how is that changing
consumer appetites really manifesting
as we start to get more news?
About potential changes and
in the path of the pandemic.
The second thing that I'm really
trying to monitor is how reliant
and the small businesses might
be on potential policies.
Last year we had PPP and we had
other avenues for support regulatory
adjustments that allowed banks to
work with their small businesses to
actually provide some accommodation.
I want to hear if they're finding
that support or how reliant they
might still be on that support.
Are we really still getting
growth coming from consumers and
their willingness to be outspent?
Or are we seeing more reliance
on their savings?
Are we seeing more reliance on
other types of programs and policies
that are out there?
I think that's a real indication
to how the small business community
community is faring at this time.
Knicks lie with the Denver branch of
the Federal Reserve Bank of Kansas City.
Thanks for joining us. Always a
pleasure, right? Thank you.