Economic Impact of COVID-19 on Eighth District Communities
As healthcare providers responded to the COVID-19 outbreak in the United States, community development leaders across the Federal Reserve System mobilized to understand the economic implications of the pandemic for the nation’s communities.
All 12 Reserve Banks and the Board of Governors of the Federal Reserve System fielded a national survey to ask nonprofits, financial institutions, government agencies and other community organizations to report the needs of the communities they serve, as well as the entities for which they work.
The national findings were recently published in “Perspectives from Main Street: The Impact of COVID-19 on Communities and the Entities Serving Them (PDF).”
The survey’s report offers a snapshot of how communities were experiencing the effects of the pandemic from April 8-10, 2020. An examination of survey data for the Eighth District of the Federal Reserve System revealed a pattern consistent with national findings—communities sustained a significant economic shock that will require substantial recovery time; yet, community development organizations expect short-term financial setbacks that will resolve as the public health crisis subsides.
Nevertheless, data for the Eighth District illustrate the specific ways communities and community development entities in the region experience the economic fallout of COVID-19.
Data Sample Overview
Of the national sample, 313 survey respondents operate within the Eighth District. A majority of the district respondents (75%) indicated that they are direct service providers. Eighth District respondents work relatively equally across four key issue areas:
- small-business (52%)
- housing (44%)
- consumer finance (35%)
- workforce development/jobs (35%)
Most respondents reported serving the district’s rural areas (65%), though organizations working in urban (51%) and suburban (36%) locations were also represented.
Eighth District survey data indicate that the region’s communities experienced substantial economic disruption from COVID-19, though respondents identified two possible recovery trajectories for the district’s residents. The majority of Eighth District respondents reported that COVID-19 significantly disrupted economic conditions. Most respondents (59%) stated that they expect a difficult economic recovery process for communities. However, a subset of respondents (28%) took a more optimistic view in believing economic conditions would bounce back quickly once the health crisis wanes.
The previously mentioned Eighth District response categories track lower than the corresponding responses in the national dataset (69% noted significant disruption and expect the recovery to be difficult, while 22% noted significant disruption, but expect communities will bounce back quickly). These dataset differences suggest Eighth District communities were experiencing slightly less economic distress from COVID-19 than other areas across the country in early April.
Delving further into the topic of recovery time, 35% of survey respondents in the Eighth District believe it will take more than 12 months for communities to recover from the economic impact of COVID-19. The remainder of respondents split equally across the three other recovery windows posed in the survey: three and six months (18%); seven and nine months (15%); and 10 to 12 months (18%).
Assessing Community Development Entities
Consistent with national trends, Eighth District community development entities report facing less economic loss at the time of the survey than the communities they serve. These entities also anticipate a relatively quick recovery. Among Eighth District survey respondents, 34% represent non-profits, 30% represent financial institutions, and the remaining third represent other entities, such as government and private industry. This representation of organizations differentiates the Eighth District data from the national dataset, in which nonprofits had a larger representation (64%).
A portion of Eighth District respondents (39%) reported that although COVID-19 significantly disrupted their organization, they expect their entities will resume normal operations after the virus is contained. One portion of respondents (29%) characterized the disruption from COVID-19 as manageable, while another portion (25%) described the disruption as significant and foresee a difficult recovery process for organizations.
To understand the economic viability of community development entities, respondents were asked to forecast how long their organizations could operate in the current contingency environment before exhibiting financial distress. Eighth District respondents spread evenly across the response categories, which provided suggested timeframes (19% of respondents reported less than three months, 22% of respondents reported between three and six months, 11% of respondents reported between seven and nine months, 9% of respondents reported between 10 and 12 months and 16% of respondents reported more than 12 months).
In the national dataset, a majority of respondents reported that their organizations would experience financial distress in less than three months (25%) or between three and six months (26%).
The COVID-19 pandemic constitutes a substantial economic disruption to communities and community development entities across the Eighth District. It will take time for these neighborhoods and organizations to return to their pre-pandemic economic conditions. The Federal Reserve System remains committed to monitoring the pandemic to track economic changes in communities and the organizations that serve them.
Disclaimer: Responses shared in this article were selected for discussion purposes only. Complete response data for each survey question is not included, so percentages do not add up to 100%.
Megan Worden serves as a community development policy and analysis intern at the Federal Reserve Bank of St. Louis.