‘Unprecedented, nothing like it:’ Closures deal a crippling blow to Philly small businesses

The coronavirus emergency is having an immediate and profound impact on the economy, causing a sharp contraction in spending on activities that involve travel and congregating in public. Several economists on Monday forecast that the U.S. economy will shrink in the second quarter — if it is not already in recession.

The impact of new restrictions announced Monday on nonessential commercial activity in Philadelphia and the region halted many businesses, much like a snow day only without a reliable forecast about when the storm might pass.

“The only thing that came close to this was 9/11, but that was very brief — just a few weeks — and that wasn’t businesses shutting down,” said Mark Zandi, chief economist at Moody’s Analytics. “That was just fear about the uncertainty. So this is unprecedented, nothing like it.”

“The recession feels inevitable at this point,” he added.

The city’s shutdown — effective at least through March 27 — singled out hair salons as nonessential, which was like a dagger to the livelihood of Analisa Taylor, a hairdresser and co-manager of Dave’s Salon & Barber Shop in Old City.

“If we’re not cutting hair, we’re not making money," said Taylor, 52. “If we’re not making money, how are we paying the bills?"

IHS Markit, an economic forecasting service, projects the U.S. economy will contract by more than 5% in the second quarter, after years of steady growth since the 2008-09 recession.

“There’s no playbook here, we’re writing it as we go," said Gene Barr, president and chief executive of the Pennsylvania Chamber of Business and Industry, which called on Gov. Tom Wolf to suspend quarterly tax payments from businesses to provide immediate relief to rapidly shrinking bank accounts.

There was some confusion Monday about what was a “nonessential business" under new directives issued by Mayor Jim Kenney and Gov. Wolf. The city and the state defined essential businesses as grocery stores, pharmacies, day-care centers, hardware stores, gas stations, banks, post offices, veterinarians, pet stores, and coin laundries and dry cleaners. Essential city operations include public safety, health and human services, utilities, sanitation, and payroll.

The state said ”nonessential business" includes gyms, hair salons, and concert venues. Philadelphia used broader language to define “nonessential businesses” and added community and recreation centers, theaters, bars, and sports venues. But some business leaders said the intent of the pronouncements was to limit the exposure of some “public facing” businesses and did not apply to manufacturers.

“The absence of something to the contrary coming from the governor’s office, it is my opinion that manufacturing companies can and should continue to operate,” said Stephen Jurash, president of the Manufacturing Alliance of Philadelphia. He urged member companies to use precautions to keep workers at least six feet apart and to use hand sanitizers, but to remain open.

At the Di Bruno Bros. Franklin Market in Washington Square West, bottle shop specialist Frank Arico had no definitive answers for customers who asked how the shop would fare under the city’s shutdown directive. “We’re considering ourselves grocery,” said Arico, who reapplied hand sanitizer three times during a brief interview. “We do plan to stay open."

A few employment opportunities emerged amid the gloom.

Amazon.com Inc. on Monday said it plans to hire an additional 100,000 employees in the United States, according to the Wall Street Journal, as people are turning to online deliveries to help contain the spread of COVID-19. Amazon operates several large fulfillment centers in the Lehigh Valley, central Pennsylvania, Delaware, and South Jersey.

Barr said that Giant, a grocery store chain, is seeking employees for its stores, where panicked shoppers continued to clear the shelves Monday of food and other goods.

“If you’re somebody who’s gotten laid off, you might find one of the essential businesses — they probably need somebody to stock shelves,” he said.

The shutdowns will have an immediate effect on restaurants, which employ nearly a half-million workers in Pennsylvania. Steve Cook, who owns Philadelphia restaurants including Zahav and Federal Donuts with Michael Solomonov, said he and other restaurateurs met over the weekend to discuss a course of action when they learned from the city that a shutdown of restaurants was coming on Monday, following a state ban already in effect in Philadelphia’s suburbs.

“We were all in the same boat,” Cook said. “We all felt [closing] was the right thing to do for the greater good.”

Some business leaders called on customers to buy gift cards from their favorite stores and restaurants as a way to infuse some funds into cash-strapped businesses.

“We have to make sacrifices to survive while this blows over, reduce hours and lay off [temporarily] wonderful employees that we try to treat like family,” said Peter Hwang, who owns SouthGate, a Korean bar-restaurant in Center City. "And unless the financial institutions and government agencies are going to help, there are going to be a ton of restaurants, their employees, and their vendors that are in dire straits.”

Shani Newton used most of her savings to recently open a second outlet of her Germantown women’s-wear store, Dolly’s Boutique & Consignment, in the Fashion District mall in Center City. Both stores now will shut down temporarily to comply with the city’s order, but Newton still needs to pay her loans, her rent, and her utility bills.

"It’s just doom and gloom right now, but we’re resilient, small business people are resilient from the gate,” Newton said. “I’m just going to push, push, push my online presence, social media, and hope people will still shop.”

Gerrae Simons Miller, owner of Mellow Massage & Yoga in East Falls, doesn’t have an online option — her’s is a hands-on business in direct contact with customers. She had been taking precautions to disinfect the yoga rooms, but knows it is to the benefit of public health to shut down.

“It’s definitely the right thing, but it’s really hurting small businesses,” Miller said. “We are all hoping that this is something we are attacking with enough force that it will slow down and we won’t have this situation for too long.”

While global stock markets sagged on Monday, the Nasdaq stock market’s trading floor in the FMC tower in University City closed until further notice. Stock options will continue to trade electronically, and up to a dozen staffers will oversee trades from a backup center in the Navy Yard, but most of the 200 staffers and traders are staying home or trading from remote locations, a Nasdaq spokesman said.

Gas stations can remain open, but demand for fuel has fallen as commuters and shoppers stay at home. Pump prices continue to fall — they dropped below $2.50 a gallon in Philadelphia — as the industry faces an oversupply exacerbated by an oil-price war between Russia and Saudi Arabia.

“Gas prices usually increase in the spring due to an increase in demand and lower supply, but this year drivers could continue to see lower prices,” said Jana L. Tidwell, a spokesperson for AAA Mid-Atlantic.

Staff writers Michael Klein and Diane Mastrull contributed to this article.