The U.S. economy has been in a downward spiral since the coronavirus hit the country. Since then, businesses of all types—from small the massive enterprises—have been struggling to weather the economic recession financially. And, most importantly, to reopen safely.
Such a dilemma was Barry Sternlicht’s topic in his recent talk with CNBC’s Squawk Box last Tuesday, June 30. During his interview, the billionaire global investor warned that the country could face a downward cycle of economic pain if businesses cannot return to their regular operations.
The Starwood Capital founder expressed his worries over the lasting economic impact the coronavirus may incur if business closures will ensue. He said that if the current situation persists, it could eventually lead to widespread and permanent business closures that will put “extreme distress” to the U.S. economy.
“If we do not get people back to work and the enterprises back to getting revenues and profits, there is going to be extreme distress in the economy. Small businesses, hotels will go bankrupt. The airlines will go bankrupt,” Sternlicht told CNBC.
Among the many businesses that are struggling to reopen and recover are bar owners. Just recently, various areas, including Florida, Michigan, Texas, and California, are temporarily shutting down bars again ahead of the celebration of the Fourth of July.
The new mandate had caused stress and confusion among bar operators. In Texas, the state’s Bar and Nightclub Association sued the local government over the sudden closures of pubs again. David Kaplan, the co-owner of cocktail lounge Death & Co., argued that the “stop and start costs thousands of dollars,” per CNBC.
The global investor also mentioned the domino effect the situation could prompt.
He explained that if incomes start to drop, house pricing will drop too, and rent will also follow. Following the scenario, he argued that such a situation will become a “vicious cycle” and that “you won’t be able to have enough cash in Washington to get of.”
Aside from the lasting damage, the coronavirus pandemic could incur, Sternlicht also emphasized the importance of businesses to reopen in a “responsible” way. He said that following health protocols such as physical distancing and wearing of masks is necessary.
In his interview, he said:
“I do not think we need to have bars open. I do not think we should have gatherings in stadiums for political purposes. I think we should be smart about it, but I think we should get back to work.”
Kaplan, a co-owner of a cocktail lounge, stressed the same view as well. He said bars that do not implement social distancing rules are affecting those that are following the guidelines. However, he also emphasized the government’s lack of guidance.
“The guidance is so slim, […] is kind of nonexistent, so it is tough,” Kaplan told CNBC.
Sternlicht has been talking about the economic repercussions the coronavirus could bring. A few weeks ago, he also partly agreed to President Trump’s decision to reopen businesses. Yet, with the resurgence of COVID-19, it appears that the road to recovery of the U.S. economy is still long and uncertain.
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