CLEVELAND, OH — A survey of 450 businesses by the Federal Reserve Bank of Cleveland found nearly half of those companies said they're delaying or canceling planned capital expenditures amid economic concerns brought on by the COVID-19 pandemic.
"It looks like those, in many cases, are being put off, so some of the work is continuing, but whether or not we're going to see work after that, that's very uncertain at this point," said Guhan Venkatu, Group Vice President with The Federal Reserve Bank of Cleveland.
The findings come as Cleveland-based Sherwin Williams announced it had "paused" spending related to a new global headquarters downtown and a new research and development facility in Brecksville. The company said it still plans to pursue the project, but that planning will continue at a slower pace.
But Venkatu said it's not clear yet if other companies are just pausing plans or pulling the plug altogether.
"I think that's kind of the key question," he said. "In some sense, when we get beyond it, will those projects come back on-line and will we see those things get restarted? That's going to have important implications for kind of the speed of recovery."
He said early on in the pandemic, manufacturing and construction companies reported faring well, but that even those companies have started to feel the effects of widespread shutdowns.
The survey found small businesses, including restaurants, reported they did not expect to be able to continuing operating for more than a week or two if conditions don't improve.
Venkatu said that could further stall development plans.
"That's going to have implications too for activity in the region and projects that are on the drawing board, other kinds of economic development activities that people were anticipating and were thinking would be in the cards here over course of 2020 and into next year," said Venkatu.
He stressed we may not know the full economic impact on the region until we know when businesses will be able to reopen and see how people react.
"I think one of the concerns are we, for a time, still reluctant to be in public spaces around a lot of people," said Venkatu. "That, of course, is going to continue the pain for a lot of these entities that are suffering right now."