DETROIT – When restrictions started to be lifted and restaurants and shops began to reopen this month, the scene in metro Detroit was something like a city emerging from a receding flood.
Some businesses had survived; some hadn’t. Nello’s, a popular neighborhood café that had been on Woodward in Royal Oak for decades, was gone forever. But another one exactly a mile south, the Whistlestop, was welcoming back diners.
Le’s tailor shop, a wonderful place run by a Vietnamese woman, Thuy Le, who had fled Communism, sat forlorn and empty, with a “For Lease” sign on its door. But down the road, another Vietnamese refuge, Nguyen Ngoc Mai, was back doing pedicures at her business, Princess Nails.
But while most restrictions are off, it’s clear that nobody yet knows the full spectrum of the economic damage. Some entrepreneurs and restaurateurs were being cautious and not rushing into reopening, including Dennis Archer, Jr.
Archer, the 48-year-old son of a popular Detroit mayor in the 1990s, is seen as something of a leader among young entrepreneurs in Detroit. Though he is a lawyer by training, he discovered business is his first love. The businesses he has founded include Ignition Media Group, a successful integrated marketing agency, and Central Kitchen, one of Detroit’s hottest restaurants.
Yet while he wants customers at his tables and money in the till, “we are probably going to wait till (early July) to open,” he said, partly because he is right downtown, and wants to wait for downtown businesses to bring their employees back to their offices.
“You know, there’s a projection that perhaps up to 40 percent of the restaurants that will reopen out of this pandemic will close within 90 days,” said Archer, who doesn’t want to be one of those.
When you talk to businessmen and economists in Michigan, there is general agreement that nobody really knows how deep and lasting the long-term economic damage will be.
What they disagree on is how well state government has handled the crisis. Professor Charles Ballard of Michigan State University, who is seen as more liberal, is generally supportive of the actions Gov. Gretchen Whitmer has taken, but said, “I would tell her try even harder than you are now to get testing and tracing ramped up, because that’s the thing that I think will allow us to open up the economy while minimizing the chances of a resurgence of the virus.”
However, Patrick Anderson, another well-known economist, hasn’t been a fan of the governor. He is the founder and CEO of the Anderson Economic Group, which often advises businesses and causes that are seen as more conservative.
He isn’t very critical of her move to shut down much of the economy in March, when the virus was exploding across the nation and was increasing especially fast in Michigan.
But since then, he said, “I’m not particularly impressed with some of the things that have been done at the state level,” in part because they’ve been confusing. “You’ve got uncertainty when you can open (because) it’s spread out over a hundred different executive orders. Nobody can read a hundred executive orders.”
Additionally, he faults the administration for not acknowledging early enough that the state was going to take a huge hit in tax revenue because of the quarantine. “We warned about the (coming) huge loss of employment and tax revenue in March.
“March! It’s June, by the way, and state government didn’t actually officially acknowledge the huge loss they had until May 15.”
That loss is now estimated at $3.2 billion for this fiscal year, which for Michigan ends Sept. 30, and at least $3.1 billion next year.
The failure to warn of this earlier, Anderson added, blindsided some local governments, who were not prepared.
But he thinks one local government, run entirely by Democrats, did handle the situation superbly. That would be Detroit.
“I’m going to single out Mayor Mike Duggan. He was forthright. He was out there with community leaders. He was honest when the cases were spiking, but importantly, when cases were coming down, he was honest about that too, and started closing temporary facilities when they were no longer needed,” he said.
But while Anderson is not usually a fan of big government, there’s one pandemic-related program he very much approved — the Paycheck Protection Act (PPP) which enabled many businesses to get loans to cover their payrolls for two months.
“I agree with Patrick; I think the PPP was a great idea,” Archer said. “But the execution of it… well, when you are trying to do something fast to stave off an economic disaster, you aren’t going to get it perfect,” he added. “A lot of people learned that it really helped to have a good relationship with your banker before this, and frankly, this is something that a lot of African-American entrepreneurs were left out of,” Archer said, adding the he constantly urges people he meets and mentors to build such relationships.
Though there are many issues on which the experts don’t all agree, they do on perhaps the most sobering thing of all: Recovery is not in sight, and may take a long, long time.
“Do I see permanent damage to Michigan’s economy from all this? Well, at least long-term,” Professor Ballard said.
“The Congressional Budget office came out with a forecast that said the U.S. economy wouldn’t begin to recover till 2029,” he noted.
“I believe strongly that we won’t get back to anything close to normal until there is a vaccine,” he added.
That is, if there ever is.
