When PBN started its biannual business survey during the depths of the Great Recession in 2008, the local economy was experiencing the most sustained shock it had felt since the 1930s. Now we’re in another sustained recession with many similarities but also important differences for local businesses, as results from our Winter 2021 Business Survey attest.
The most obvious similarity is that businesses of all types are hurting; and many are reacting now as they did then.
You have to go back to the Great Recession to find slower winter business growth compared with the previous quarter in Rhode Island. And the percentage of businesses reporting improved net income compared with the previous year is the lowest it’s been in Rhode Island since 2008.
Then, as now, a drop in revenue for many businesses was exacerbated by rising prices for materials and supplies. That dynamic has about the same 13% of respondents planning to raise prices next quarter as in 2008.
And not surprisingly, relatively few businesses are planning big-ticket purchases next quarter, as was the case in 2008.
But the root causes of the two recessions are vastly different, as are some effects. The economic harm has been less-evenly distributed in the pandemic. That may explain why more business owners today are hopeful about both the recovery of their own businesses and the state economy in the coming year.
Vaccines and federal loan programs may indeed spur recovery this year for those who have suffered least. Others, however, will surely be reminded of 2008 for years to come.
