Even if they did not anticipate the May rebound, many economists expected unemployment to begin to fall with the reopening of states and the return of businesses to work.
More than half of the month’s job gains – 1.4 million – were made in restaurants and bars, many of which received assistance under the government’s paycheck protection program. Friday’s report suggests the program, along with other elements of the government’s response, has helped offset at least some of the economic damage caused by the closure, which should allow for a faster rebound.
“The economy is still largely under stimulus,” said Michelle Meyer, head of the US economy at Bank of America. “When it starts to decline, we will learn much more about the underlying health of the recovery.”
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At Beef ‘O’ Brady’s, a chain of more than 150 sports bars based in Florida, business was down 62% in April, when its dining rooms were closed nationwide and its only business was takeaways. But only a handful of chain restaurants have closed permanently, in part because almost all of its franchisees have received Paycheck Protection loans.
“The damage would have been much greater without PPP, I can tell you,” said Chris Elliott, the general manager.
Today, business has started to recover, with states gradually allowing restaurants to reopen. In the last week of May, sales fell about 15%, said Elliott, and customers seem impatient to eat again.
However, the longer term prospects are uncertain. If business remains at its current level, many franchisees will struggle to make a profit, he said, and in half of the sites, sales are still down more than 50%. It will not be sustainable for long.