Federal response remains uncertain as COVID-19 cases show strong upsurge. Economic struggles increase.

State and local governments face plummeting revenues. COVID-19 cases increase rapidly across the country, with Washington now in an “explosive” situation according to a new report. Businesses, state and local officials, and unemployed people await the next phase of federal pandemic relief funding. And Congress remains divided on the size and timing of any such response. It’s not a good situation.

The Associated Press reports,

The desperate race to corral the coronavirus pandemic took on even greater urgency Monday as a burgeoning economic crisis collided with political turmoil. Even as the latest experimental vaccine appeared to show promise, politicians in Washington seemed far apart in finding a way to bring financial relief to Americans.

As the first federal relief package was poised to come to an end, members of Congress were trying to come to agreement on another package to ease the financial burden Americans have dealt with as businesses have endured repeated shutterings or pauses since the virus first appeared on the continent…

There remains a wide gulf between the GOP and Democratic packages, with Democrats passing in the House a $3 trillion package, while the Republican package came in at about $1 trillion.

Between those two numbers lies the funding for state and local governments. The AP writes,

State governments have been forced to borrow billions of dollars and slash costs by furloughing workers, delaying construction projects, cutting aid to schools and even closing highway rest areas. For many states, as well as local governments, the main hope for avoiding even deeper cuts is to get help from Congress.

With revenue losses approaching $9 billion over the next four years to Washington state government, legislative leaders and the governor here seem to be betting heavily on federal relief, even as they postpose a legislative special session to respond to the fiscal crisis. Another AP story focuses on governments’ precarious fiscal status,

For many states, as well as local governments, the main hope for avoiding even deeper cuts is to get help from Congress, which returns from vacation this week…

The House passed a bill in May to provide another $3 trillion, with about a third of it going to state and local governments. Senate Majority Leader Mitch McConnell, a Kentucky Republican, is calling for a more modest package worth around $1 trillion total. He has not announced details, but he has said that school funding is a priority.

Bipartisan groups including the National Governors Association and the National League of Cities, along with a long list of businesses, want a major aid proposal. If it does not come through, they foresee harsh consequences.

As the pandemic shows few signs of slowing, businesses brace for a difficult recovery. The Seattle Times offers a revealing, if bleak, insight into the challenges in a story headlined, If the COVID-19 shutdown didn’t kill your business, trying to reopen might.

Even if COVID-19 is kept at bay, many businesses are bracing for months of lower revenue from health restrictions, consumer uncertainties, and the complicated economic ripple effects of stay-at-home and other social changes during the pandemic. Just last week, Amazon extended its work-from-home policy to early 2021.

Many businesses can expect only between half and three-quarters of their pre-COVID revenue through 2020, warns Thomas Gilbert, associate professor of finance at the University of Washington Foster School of Business. In some sectors, such as restaurants and hotels, expectations are even lower.

Again, the federal response is critical.

Although many small businesses have received state and federal assistance, such as Paycheck Protection Program loans, many missed out.

Although policymakers will likely extend some programs, business still won’t be able to depend on getting assistance. “Even if they start injecting money into the system, you don’t know if you’re going to be the one to get it, or if it’s going to be your competitor,” warns Jeff Shulman, professor of marketing at the UW’s Foster School.

In a dramatic example of how economic multipliers work in a downturn, The Seattle Times reports on how small businesses located near the major Amazon facilities are coping with absence of much of their customer base.

For many small businesses built on a clientele of Amazon workers in South Lake Union and the Denny Regrade, their absence for the remainder of the year could be an existential threat.

It’s as if the neighborhoods surrounding one of America’s densest urban corporate headquarters have been sucked back a decade in a matter of months, to a time before some 50,000 well-paid Amazon employees streamed in each day, grabbing morning coffee or hitting the gym for a before-work sweat, swarming the streets in search of lunch and gathering over happy hour drinks.

Sales have plunged, but for most, the rent is still due.

It’s a story worth reading. The pandemic offers a unique insight into the interaction between large and small employers, supply chains, and the synergies of complex economies. Also, the story shows how Amazon is working to mitigate the hardship of the shutdown for small businesses in the area.

A company spokesperson said Amazon is offering small businesses social media training, marketing their services to residents of nearby residential buildings and piloting a free restaurant delivery service, in addition to the financial support.

Amazon sees retail and restaurant tenants in their buildings “as amenities, not profit centers,” said Marc Chatalas, who co-owns the local Cactus restaurants with his brother, Bret. While many tech employers offer free, often lavish, food to employees in corporate cafeterias, Amazon does not, instead building space for restaurants and coffee shops into its buildings.

The Chatalas brothers opened their location in the heart of Amazon’s South Lake Union headquarters, now one of six in the region, in November 2011. In the early years, Marc Chatalas estimated 95% of their business came from the company. Having made it through the disruptions of the neighborhood’s construction boom, and with growing sales to people living nearby, “the prospect for 2020 was positive,” he said. Now, “we are simply hanging on, hoping to live to fight another day.”

As COVID-19 has ravaged the restaurant business, Amazon has “become the gold standard for what it means to be a collaborative and supportive landlord,” Chatalas said, adding that his company has benefited from both a grant and rent abatement from Amazon.