Observers: Berkshire business closings loom; rebound will be lengthy

Stephen Sheppard, an economist who teaches at Williams College and is a close student of the region's economy, believes that today's economic mess holds the potential to influence attitudes about money as dramatically as the Great Depression did nearly a century ago. The most optimistic look forward, Sheppard said, involves cultural institutions reopening in late summer and students coming back at area colleges in September.

NORTH ADAMS — Never mind the guessing game over when people can begin to resume pre-pandemic lives. It's already clear, observers say, that Berkshire County's economy is in trouble.

"The year 2020 is going to be a massive hit — and devastating for some," said Stephen Sheppard, an economist who teaches at Williams College and is a close student of the region's economy. "It is just going to be one for the record books."

Given the depth of job losses, business shutdowns and lost consumer confidence, Sheppard and others expect that the rebound will take longer than the Great Recession of 2008-09.

That's due, in part, to the primacy of the county's cultural economy, which has been flattened by coronavirus cancellations.

Businesses that depend on summer tourism, including restaurants and hotels, will be particularly hard hit, even those able to take advantage of federal funding through the CARES Act, the U.S. government's $2.2 trillion package to help businesses, workers and a health care system staggered by the coronavirus. Congress just added $483 billion to a business loan fund that ran out. Scores of Berkshires businesses that came up empty on the first round of the Paycheck Protection Program get another chance at money to keep local people working.

But, the funding is short term.

Cheryl Mirer, executive director of Downtown Pittsfield Inc., is concerned about businesses that might never make up losses they are incurring, even with government loans that might be forgiven.

"It's not enough, and not everybody got help," she said of the loan program. "Obviously, I'm worried about it."

While some downtown Pittsfield restaurants are selling food to go, that stopgap measure might not be able to sustain the businesses for long — and Mirer feels that some could close.

"I don't have any data to point to on who that would be," she said of businesses at risk. "It's difficult overall."

To help, the group is selling gift cards to local stores on its website. As of Friday, $15,000 worth of cards had been ordered.

"It would be great if it was going better," Mirer said.

State Rep. John Barrett III, D-North Adams, said the previous recession offers no rule of thumb.

"That was a cakewalk compared to what we're facing here," Barrett said. "This is going to hit Berkshire County — and northern Berkshire County especially — harder than anyone can imagine. It will take years to recover."

Barrett said he fears that many businesses, despite taking steps to protect themselves, will not be able to weather losses. "Some small businesses are just not going to be able to survive this."

`Throw in the towel'

Sheppard believes that closings by leaders in the creative economy, including the Massachusetts Museum of Contemporary Art, will test not only them, but all businesses that feed off the traffic they generate, including restaurants.

"They probably don't see the other side of this crisis," he said. "The longer this goes on, the more restaurants are just going to throw in the towel."

For each company that hits the wall, lives are changed. Sheppard believes that today's economic mess holds the potential to influence attitudes about money as dramatically as the Great Depression did nearly a century ago.

"It will change people for their entire lives when it's serious enough," Sheppard said. "It's absolutely going to be a depression on the employment level."

At the worst of the Great Recession, the Massachusetts jobless rate was 8.8 percent. Filings for unemployment since March 15 now top 26.5 million nationally, including 653,000 claims in Massachusetts. That state number does not count more than 200,000 people, including the self-employed and independent contractors, who now can seek help through an expanded benefits program.

The Massachusetts Taxpayers Foundation had predicted this month that the state jobless rate could hit 18 percent in June. But, with new numbers out Thursday on claims, the Pioneer Institute calculates that the state unemployment rate is now "at least 20.4 percent." Five weeks ago, it stood at 2.8 percent.

The most optimistic look forward, Sheppard said, involves cultural institutions reopening in late summer and students coming back at area colleges in September, bringing in money from around the world. If that happens, and virus cases continue to decline, the national economy could show signs of recovery around this time next year, Sheppard said.

But, it's not clear that that optimism is warranted, given debates over how to "reopen" the economy. Many believe that it will take widespread availability of tests, and eventually a vaccine, to restore public confidence.

The wallet question

Dan Bosley, of North Adams, a former state representative who now runs a consulting firm, said no one has a game plan on restarting commercial life.

"It's not going to be like flipping a switch. We've never gone through anything like this," he said. "I think there are a lot of businesses around the county that are never going to open up again."

Even when people feel safe enough to gather, it remains to be seen what will be in their wallets after months of constrained finances.

"How long does it take them to get disposable income?" Bosley asked.

In the months ahead, smart local businesses will secure their finances by cutting costs while remaining alert to opportunity. Bosley said that, where possible, companies with access to capital should consider branching into new markets.

The worst thing to do, he said, is allow business relationships, particularly with bankers and vendors, to go cold. Bosley chairs the board of MountainOne Bank.

"You can't walk in when you're broke," he said. "Banks want to work with you, but they need to be informed as a business partner."

Bosley and Barrett say help from state and federal governments is key to preventing wholesale commercial collapse.

Sheppard cautions, though, that government aid that is meant to spur economic activity might not have that effect. "You can go through all the stimulus dollars you want, but if people are shut up in their houses and afraid to go to the store, it's not going to help."

John Bissell, president and CEO of Greylock Federal Credit Union, believes that community leaders need to collaborate to ensure that the region comes back.

"We recognize that we're going to have to band together now more than ever," Bissell said. "That is what we're going to need to rely on."

Larry Parnass can be reached at lparnass@berkshireeagle.com, at @larryparnass on Twitter and 413-588-8341.