Pub. 1 2020 Issue 5

11 ISSUE 5 | 2020 Figure 3: Net Average Monthly Income Deficit After State and Federal Unemployment Benefits (source: U.S. Bureau of Labor Statistics & U.S. Department of Labor) As the coronavirus recession reaches its four- month mark, we continue to receive more data that provides greater clarity to the good, bad, and ugly of this contraction. On one hand, this recession will likely be much shorter than its predecessors given its origins as an exogenous, non-economic shock. But the financial pain inflicted on consumers and businesses will also set new records in severity, while the path to economic recovery is akin to geographic roulette, making for a disjointed and spotty return to normalcy. Many unknowns remain concerning the United States’ eventual road to recovery, most of which depend on the ability of public health authorities to contain this outbreak via testing at a meaningful level until the development and distribution of a vaccine. In the meantime, we know that community banks continue to be a vital component to the recovery equation. Community banks were the most prevalent conduit for small businesses seeking lifelines in operating capital via the Paycheck Protection Program, issuing nearly two-thirds of PPP funds, which were critical for mitigating further increases in unemployment and supplying households with much-needed income to weather declines in liquidity due to decreased business activity. continued on page 12 While the current economic landscape may appear bleak at first sight, the data presents a strong case for cautious optimism as we press forward in these uncertain times in hopes of a brighter tomorrow. Figure 3 examines the average monthly income deficit by state, calculated as the average monthly wages lost from rising unemployment offset by state and federal unemployment benefits in April. Despite robust protections for unemployed workers, 28 states experienced an income deficit, while extended unemployment provisions implemented by the CARES Act, which are set to expire by the end of next month, provided a vital lifeline to 34 states by enabling them to recoup more than 50% of the difference. Because each state is in a unique position concerning mitigation of the coronavirus pandemic and consequent economic injury, there will not be a synchronized national recovery, and certain states will need additional assistance to fully heal.