Looking Back At A Year Of Pandemic

Just as everyone can tell you exactly where they were when they heard about the September 11 terrorist attacks, people can tell you where they were when they came to grips with the enormity of the coronavirus pandemic.

Unlike September 11, though, when everyone got the news simultaneously, the pandemic was more like a slow-moving freight train. People on the East End grasped the enormity of the health and economic crisis enveloping them over a period of several weeks, as summertime crowds materialized in March, the scent of bleach and the sight of checkout clerks behind Plexiglas shields greeted visitors to grocery stores, and gyms, restaurants, theaters, and retail shops, which had been bustling with business, suddenly closed their doors.

In the midst of all of this, the stock market tanked, taking everyone’s retirement savings down with it. Then, an economy that had been humming along as close to full capacity as possible began to jettison jobs by the millions, with the unemployment rate spiking at 14.8 percent nationwide.

For the second quarter of 2020, the Gross Domestic Product, the broadest measure of economic activity kept by the federal government, cratered by 32.9 percent, the biggest drop in history, as the wheels of the American economy ground to a halt.

But if Congress has learned anything since the Great Depression of the 1930s, it’s not to mince on relief packages.

Barely a month after most Americans had learned what COVID-19 was, Congress had passed the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, the largest stimulus in history, which pumped $2.2 trillion into the economy in the form of direct payments to most Americans, increased unemployment benefits, and billions more in loans to businesses. Much of that loan money, specifically the $669 billion that was earmarked for the Paycheck Protection Program, was forgivable, provided businesses maintained a percentage of their staff on the payroll.

Today, the stock market is at new highs, GDP has bounced back to a 4.1 percent annual clip, and unemployment is a much more manageable 6.2 percent.

A year after the pandemic engulfed the East End, financial professionals weighed in on the effectiveness of the relief programs, the resiliency of East End small-business owners, and the state of the economy as the stock market flirts with new highs, unemployment stabilizes and another $1.9 trillion in stimulus money is about to drop on the American economy.

“It’s hard to pinpoint where we were economically as a country,” said Greg Ferraris, a Sag Harbor accountant, “but the eastern end of Long Island is flourishing, and I don’t see any sign of it letting up.”

Much of the credit for that, according to Rocco Carriero, a Southampton financial advisor, is due to the effectiveness of the federal stimulus package.

“The Paycheck Protection Program was the most successful small-business economic stimulus plan I’ve ever seen, maybe the most successful in the history of the country,” he said. “It provided owners with the ability to pay their staff, so it kept many people off unemployment.”

Besides that, businesses that kept a certain percentage of their workers on the books qualified to have their loans forgiven — essentially, they became grants.

Despite some early glitches, when some small businesses had trouble accessing the loans, Mr. Carriero said the PPP was “orchestrated perfectly,” because “they left it in the hands of the private sector.”

Steven Kaczmarek, the owner of East End Wealth Management, a financial advisory firm in Hampton Bays, agreed that fast turnaround was a key to the success of the federal aid programs.

“The best move by the federal government was the distribution of money directly to taxpayers to supply them with much needed cash,” he said. “Had they sent that money to the states, we’d still be waiting for it.”

Kevin O’Connor, the CEO of the Dime Community Bank, which recently merged with BNB Bank, agreed that the government made the right choice by “deputizing the banking system” to oversee the distribution of emergency loans. A year into the pandemic, he estimated that the two banks combined had processed close to $1.4 billion in loans. Of that, about $600 million was distributed during the first month and a half of the funds being made available, he said.

“Our people felt we could make a difference, and I think we did,” he said.

Still, Mr. O’Connor said many individuals and small businesses are hurting, and while he, like others, fears that some of the latest $1.9 trillion COVID relief package, signed by President Joe Biden on March 11, will go to politically popular causes, he said money for more business loans, for rent assistance, and to make sure vaccines are widely distributed will help the economy rebound strongly later this year.

Mr. Kaczmarek said there were winners and losers in the local economy. “Who would have thought prices for homes on the East End would jump the way they did and Realtors would have their best year ever?” he said. “And who would have thought RVs and boats would have sold out? Companies that do deep cleaning is another example.”

But, Mr. Kacmarek added, there was a flip side to that coin. Many waiters and other restaurant workers, who were laid off when their employers shut down or switched to takeout service, have been thrown out of work. And it remains to be seen if those jobs will ever return, he said, citing just one example of those who were hurt badly.

“At the beginning, there was a heck of a lot of panic,” said Kevin Luss, the owner of the Luss Group, a financial advisory and insurance broker in Southampton. “People didn’t see this coming.”

He agreed that the PPP program made a big difference for many small businesses by enabling them to keep their employees on the books for several months when they otherwise would have been forced to let them go.

“I think the PPP helped, the extended unemployment helped,” he said. “But in a small community like this, the employees are more than employees. I talked to a lot of business owners who said they were not going to abandon their workers.”

While much has been made about which industries fared well and which fared poorly during the worst of the pandemic, Mr. Luss said it appeared the East End was “an unintended beneficiary, because this was the place people were fleeing to instead of fleeing from.”

So, while other regions with tourist economies struggled, on the East End many businesses thrived, including real estate, home construction, landscaping, and restaurants that pivoted to takeout service, he said. Other businesses, including gyms, movie theaters and entertainment venues, suffered because of lockdowns, he added.

The stimulus “allowed some businesses to hang on and others to flourish,” said Mr. Ferraris. “It comes down to those businesses that were flexible and able to adapt to a changing landscape. When you are the owner of a small business, which is mostly what we have here, the buck stops with you. Therefore, you need to be flexible to be able to make decisions in an ever-changing environment.”

Mr. Carriero said it was inspiring to see “the reshaping of different businesses and the creativity that came with it” in response to the pandemic. He cited fine restaurants that brought in food trucks or offered takeout, landscaping crews that figured out how to get workers to the job site when state guidelines limited the number of people who could drive in one truck, and small shops that transitioned to an online presence.

Now, as vaccinations become more widespread and the economy returns to normal, it’s time for accountants like Mr. Ferraris to sort things out.

“It certainly comes with its challenges,” he said of his profession, and especially this tax season, “due to the complexity of ever-changing rules and regulations.”