9/7/2023 0 Comments Possible lockdown californiaWe find that sales losses were largest in businesses affected by mandatory lockdowns such as accommodations, drinking places, and arts, entertainment, and recreation. The average losses of 17% in the second quarter of 2020 relative to the second quarter of 2019 occurred even though year-over-year sales typically grow by 3-4%. We examine how much businesses lost in sales using administrative sales tax data. Sales fell more steeply in counties with more COVID-19 cases. Accommodations lost 91% of sales, whereas online sales grew by 180%. Plain English Summaryīusiness sales dropped by 17% on average due to the pandemic during the second quarter of 2020 in California. The results suggest that local implementation and enforcement of lockdown restrictions as safety measures for public health and voluntary behavioral responses as reactions to the perceived local COVID-19 spread both played a role. Placing business types into different categories based on whether they were considered essential or nonessential (and thus subject to early lockdowns) and whether they have a moderate or high level of person-to-person contact, we find interesting correlations between sales losses and COVID-19 cases per capita across counties in California. We find that sales losses were largest in businesses affected by mandatory lockdowns such as accommodations, which lost 91%, whereas online sales grew by 180%. Losses in taxable sales average 17% in the second quarter of 2020 relative to the second quarter of 2019 even though year-over-year sales typically grow by 3-4%. We provide the first analysis of losses in sales among the universe of businesses in California using administrative data from the California Department of Tax and Fee Administration. Estimates from the Current Population Survey, for example, indicate that the number of active business owners dropped by 22% from February to April 2020. COVID-19 led to a massive shutdown of businesses in the second quarter of 2020.
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