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These posts examine local, regional and national data that matter to the Fifth District economy and our communities.

What Businesses are Saying About the COVID Crisis

Regional Matters
May 29, 2020

For the past few months, we have added additional questions to our monthly surveys, asking businesses in the Fifth District about their experiences and challenges dealing with the pandemic. We reported our findings in previous Regional Matters posts in March and in April.

In our latest survey period, we again asked firms to describe their current operating status and challenges with respect to COVID-19 and their expectations for when and how business will return to pre-pandemic levels. In addition to adding these questions to our monthly business surveys, several chambers of commerce in our district agreed to send the survey to their members. In total, there were just over 1,000 responses to the survey, which was fielded from April 30 to May 20. The chart below shows that while the survey sample was not a perfect representation of the Fifth District economy, many industries were represented in proximity to their share of the number of private establishments in the district.

Firm Operating Status

Overall, the results showed that the vast majority (89 percent) of surveyed firms were open for business, with almost half of firms saying that they were operating at full capacity. Among the 11 percent that said their business was currently closed, all but two said that they planned to reopen. There was considerable variation, however, across industries. The chart below shows that in some of the most affected industries, such as art and entertainment, accommodation and food services, and retail, a significant portion of businesses were closed at the time of the survey.

The results also showed that small businesses were more likely to be closed than midsize or large firms. In fact, companies that had 10 or fewer full-time employees were twice as likely to be closed as midsize companies (11 to 50 employees) and four times more likely to be closed than a firm with more than 50 full-time employees.

Regardless of industry or size, just about every survey respondent reported some sort of negative effect from the pandemic. More than 80 percent of responding firms said they lost sales and revenue and almost two-thirds said they had to restructure operations or reduce hours. Many firms also said that they had to lay off or furlough staff or were having trouble maintaining staff, some of which was attributed to absenteeism.

Firm Solvency

We asked firms how much longer they could stay solvent if current conditions persisted. A majority of businesses (63 percent) reported that they did not anticipate a permanent COVID-19 related closure and about 11 percent said they were unsure. Of the businesses that thought they might have to close, there was variation in the length of time they could remain solvent under current conditions, as some said less than four weeks and others more than 13 weeks. We broke down responses to the solvency question by current operating status of the business. Firms that were fully operating were more likely to say that they did not anticipate closing than those who were not operating or were not operating at full capacity. Firms that were currently closed were most likely to say that they could only survive another one to four weeks. (See chart below.)

Larger firms were generally more confident about their ability to remain solvent than smaller firms. More than 90 percent of surveyed firms with at least 500 employees were not considering a permanent closure. Firms with 10 or fewer employees, on the other hand, were less confident, with only about half expecting to remain open indefinitely. Moreover, about 10 percent of firms with 10 or fewer employees believed that they would have to close permanently if current conditions persisted for the next four weeks, compared to only 1 percent of firms with at least 500 employees expressing this concern.

Once again, firms in the most directly impacted industries were the most pessimistic. More than half of firms in accommodation and food services and in arts, entertainment, and recreation believed they would have to close if conditions did not improve. In fact, 30 percent of accommodation and food service firms and 25 percent of retail and wholesale firms said they could not last more than eight weeks under current conditions.

Future Activity and Employment

Just over half of surveyed firms thought that it would take more than six months for conditions to return to a pre-COVID level of activity. These beliefs were fairly consistent across firms of different sizes and industries, with a few exceptions. Wholesale and information companies, for example, were generally more optimistic and believed that activity would be back to normal by November. Accommodation and food services, on the other hand, were more likely to say that it would take more than a year to return to prior levels of activity.

The majority of firms expected to return to pre-COVID levels of staff, but about a third expected to run a leaner operation. In general, larger firms were more likely to expect a permanent reduction in staff than smaller firms. Expectations about staffing also varied across industry, as only about half of firms in accommodation and food services, arts and entertainment, and transportation and warehousing expected to return to pre-COVID employment levels. In contrast, more than 80 percent of construction firms and health care firms expected to return to pre-pandemic employment.

Of firms that planned to cut employment, two-thirds anticipated running only slightly leaner operations (a reduction of no more than 20 percent), while only a small number of firms expected to cut employment by more than half. Larger firms were also more likely to expect a smaller percentage cut in staff than firms that had fewer employees to start. But, of course, a small percentage cut at a large employer could still be more jobs lost than a sizable reduction at a business with only five employees.


The results of our surveys give us a better picture of current conditions and the struggles that firms are facing. While the majority of businesses surveyed have suffered some negative effects and loss of revenue as result of the COVID-19 crisis, most firms remained open and operating, at least partially, when surveyed. The forward-looking parts of the survey revealed signs of optimism and some areas of concern for recovery. Most businesses expected to remain open and eventually recover and bring back the majority of their employees. However, firms generally think it will take at least six months to return to pre-COVID business levels, and there were a small number of firms that did not anticipate a full recovery, particularly those that depend on social gatherings, such as hotels, restaurants, and retail stores.

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Views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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