Last year was monumental to say the least. Life as we once knew it became a thing of the past, for individuals and businesses alike. As countless businesses struggled to adjust to the unforeseen challenges presented by the pandemic, the Paycheck Protection Program (PPP), part of the CARES Act, was a lifeline for many.

The PPP loan program was intended to help small businesses, although numerous large businesses also benefited. According to the Small Business Administration, over five million PPP loans were approved, the majority of which went to small businesses. Ninety-two percent of the loans given out were $250,000 or less and 87% were under $150,000. The average loan size was $100,729. 

Many businesses needed the money to keep employees working and to pay for everyday expenses to keep the business open. Business owners were told that the loan would also be “forgiven” as long as the money was spent on payroll (60% requirement), mortgage interest, utilities and rent during the eight or 24-week period after disbursement. While the rules for how to use the PPP loan funds were fairly straightforward, the tax effects remained murky.  For months the IRS has taken the position that the expenses paid with PPP loans which were forgiven would not be deductible on the business’s tax return. With bated breath, the nation awaited Congressional relief with respect to COVID-19. Relief came through at the last minute, including a provision that expenses paid with PPP will be deductible. Congress also reiterated that any forgiven PPP loans will not be includible in the business’s income.

Here are six things you should know about PPP loans and your taxes:

You Can Deduct Expenses Paid for with the Loan Proceeds Payroll, mortgage interest, rent and utility expenses are all forgivable uses of the loan and Congress has superseded the IRS’s guidance in Notice 2020-32 disallowing such expenses. Not only are these expenses deductible, but Congress has broadened the categories of expenses that may be paid for with PPP funds to include: software, cloud services, accounting, human resources, property damage due to civil unrest, personal protective equipment, and supplier costs ordered or contracted for prior to loan approval.

You Do Not Have to Include Forgiven PPP Funds in Income While loan proceeds forgiven by the lender are generally includible in income, PPP loan forgiveness is an exception to the general rule. Businesses do not have to include the debt forgiveness in their income.

You Can Take Advantage of the Families First Coronavirus Response Act (FFCRA) The FFCRA requires some employers to provide employees with paid leave for reasons related to COVID-19. However, businesses can still take advantage of the FFCRA tax credits in addition to utilizing the PPP loan.

You Can Defer Payroll Taxes Under the CARES Act, employers may elect to defer payroll taxes from March 27 through December 31, 2020. Fifty percent of the deferred taxes accumulated in 2020 must be paid by December 31, 2021 and the remainder must be paid by December 31, 2022. 

You Cannot Use PPP Money to Pay for Business Taxes As mentioned above, the PPP loan may only be used for certain identified categories of expenses. You cannot use the loan proceeds to pay income, sales, or other tax liabilities.

You Can File an Amended Tax Return If you applied for forgiveness but have not received a decision from the IRS at the time of tax return filing and you later learn that you will not receive full or partial forgiveness, you may make the related adjustments by filing an amended return.

Taxes are daunting even without COVID-19 and PPP loans to worry about. Add in conflicting guidance by multiple government agencies and it is understandable that a small business owner may feel overwhelmed. Fortunately, Congress enacted favorable provisions applicable to PPP funds and provided certainty to small businesses awaiting answers before year’s end. If you need further guidance, the tax lawyers at The Cavanagh Law Firm are always available to answer any questions. 

Giselle Alexander is an Arizona Certified Tax Law Specialist, a CPA, and holds a Masters in Law in Taxation. Giselle represents clients at all states of the tax controversy process and is one of only a few tax attorneys in the U.S. with experience in trying 831(b) micro captive insurance cases before the U.S. Tax Court.

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This holiday season the country should have a renewed sense of hope as our frontline workers continue receiving the first round of COVID-19 vaccinations and now with the passage of an additional round of COVID relief, the second largest relief package in our nation’s history following the CARES Act.  

After months of delay, Congress late Monday overwhelmingly passed containing $900 billion in COVID relief and $1.4 trillion to fund the government through September 30, 2021.  

The COVID relief package delivers needed relief for American businesses, nonprofits, and families hit hard by the pandemic. 

Learn more about what this relief means for you and/or your business with a few significant highlights of the package below.  

• RELIEF FOR INDIVIDUALS AND FAMILIES:

1. Direct payments to individuals
   Individual adults will receive $600 for those making up to $75,000 a year on their 2019 tax returns, $1,200 for couples making up to $150,000, and $600 for each dependent child. Individuals earning between $75,000 and $99,000 would receive a partial payment.Ěý

2. Extended aid for unemployed workers
   Extends unemployment benefits for jobless workers, who will receive up to $300 per week through March 14^th.  This includes the Pandemic Unemployment Assistance (PUA) which provides UI benefits to workers who traditionally are ineligible.Ěý
   Ěý
3. Rental Assistance
   Provides $25 billion in rental assistance to help pay past due rent, future rent, and utility bills. Extends the existing CDC eviction moratorium through January 31, 2021. The Treasury Department will disperse the rental assistance to states via a formula based on population.ĚýĚý

• CONTINUED LIFELINE FOR SMALL BUSINESSES: Ěý

4. Extends and expands the Paycheck Protection Program (PPP)
   Provides renewed funding of $284 billion and extends the program to March 31. Will provide forgivable loans to both first- and second-time small business borrowers. The bill expands eligibility of the program for 501(c)(6) nonprofit and destination marketing organizations. It authorizes hard-hit small businesses with fewer than 300 employees and at least a 25% drop in gross receipts over a specified period to receive a second loan. The bill dedicates a portion of the funding specifically for low-income communities and sets money aside for loans from community-based and minority-owned lenders.
   
   The bill makes some changes to the program to reduce the maximum loan amount from $10 million to $2 million and expands how funds can be used. While the requirement that 60% of the PPP loan must be used for payroll remains in place, Congress added four additional categories for qualified expenses: 1) operations expenses for items such as software and computing, 2) supplier costs for goods essential to the operation of the business, 3) worker protection expenses such as items need to protect workers and customers to comply with CDC guidance i.e. plexiglass, expansion of outdoor dining etc., 4) property damage expenses as result of riots.Ěý
   
   While the CARES Act specified that forgiven PPP loans would not count as taxable income, the new package clarifies that businesses can deduct expenses paid with forgiven PPP loans.Ěý

5. Expands the Economic Injury Disaster Loan (EIDL) ProgramĚý
   Provides $40 billion to extend the Small Business Administration EIDL grants through December 31, 2021 and sets aside $20 billion for employers in low-income areas with 300 or less employees who experience at least a 30% economic loss, allowing them to receive a $10,000 grant. Authorizes individuals who previously received a partial EIDL grant to receive an additional payment for a combined total of $10,000. Importantly it removes the requirement for EIDL emergency grants to be deducted from the calculation of PPP loan forgiveness.Ěý

Are you a small business that needs help navigating these new changes and impacts to your existing relief? The to answer your questions that will continue to be updated as more information becomes available.   

• TARGETED BUSINESS SUPPORT:

6. Live venue grant program ĚýĚý
   Provides $15 billion for the Small Business Administration to concert venues, independent movie theaters, live entertainment venues, museums, and cultural institutions who demonstrate at least a 25% decline in revenue.
   Ěý
7. Transportation and travel support
   Includes $45 billion for relief to transit agencies, airlines, airports, state departments of transportation, the motorcoach industry and Amtrak. Includes $15 billion to cover airline salaries and benefits through the end of March, $1 billion for airline contractor payrolls, and $2 billion for airports and airport-based business.
   Ěý
8. Support for the agriculture community & food supply
   Provides $12 billion to crop farmers, cattle ranchers, and rural communities.

• TAX PROVISIONS PROVIDE RELIEF AND STIMULATE ECONOMIC RECOVERY

9. Employee Retention Tax Credit (ERTC)
   Extends the ERTC to July 1 and increases the refundable payroll tax credit from a maximum of $5,000 to $14,000 by changing the calculation from 50% of wages paid up to $10,000 to 70% of wages paid up to $10,000 for any quarter.Ěý

10. Low-Income Housing Tax Credit (LIHTC)Ěý
    Increases allocations to states for LIHTC which subsidizes the construction and rehabilitation of housing developments that have strict income limits for eligible tenants and their cost of housing.ĚýĚý

11. Employer-side Social Security Payroll Tax Credits
    Extends through March 2021 to offset paid sick and family leave related to the coronavirus created Families First Coronavirus Response Act.  

12. Deduction for Business Meals
    Expansion of the deduction for business meals to 100% for 2021 and 2022. 
     
13. Tax Extenders
    The bill included tax extenders for 32 of the 33 tax provisions that were set to expire at the end of 2020 including the permanent extension of lower excise tax rates for beer, wine and spirits, and the 5-year extension of tax incentives for investing in low-income areas and hiring workers from disadvantaged groups.  

• SUPPORT FOR SCHOOLS AND CHILDCARE ORGANIZATIONS TO CONTINUE SAFE OPERATIONS

14. K-12 schools and higher education support Ěý
    Provides $82 billion in funding for schools and universities to assist with reopening which includes $54.3 billion for K-12 schools and $22.7 billion for higher education.ĚýĚý

15. ĚýSafe opening of childcare Ěý
    $10 billion for childcare centers to help providers safely reopen and $250 million for Head Start providers.ĚýĚý

• COMBATING THE VIRUS WITH ADDITIONAL HEALTHCARE SUPPORT

16. Vaccines, Testing & TracingĚý
    Provides a total of $63 billion for vaccine distribution, testing, tracing and other health-care initiatives. Of this amount, $22.4 billion will go to states for testing, tracing and COVID mitigation programs, of which $2.5 billion is dedicated as grants targeting rural areas and communities of color.Ěý

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Members of Arizona’s congressional delegation updated the business community on legislation important to industry and commerce last week at the annual Update from Capitol Hill presented by the Arizona Â鶹´«Ă˝Ół»­ of Commerce and Industry and Salt River Project. 

The most discussed topic was the proposed fourth round of federal COVID-19 relief funding that has stalled in Congress.

Senators Kyrsten Sinema (D) and Martha McSally (R) both expressed their frustration with the process and vowed to continue to fight to break the deadlock. 

But it may not happen before the election, leaving those most in need behind. 

“This isn’t a game to me, because all across our state and across my neighborhood, people are struggling and still need relief,” McSally said. 

Sinema said she was disappointed that the White House and Congress are unable to compromise “when so many Arizonans are in need.”

“Partisan bills that won’t pass won’t move us any closer,” Sinema said. 

COVID-19, tourism, immigration, climate change among top concerns 

The two senators and seven of the state’s nine representatives “zoomed” in to give updates and answer questions virtually at the event. 

About 450 participants tuned in to hear what Arizona’s federal lawmakers are championing in Congress.

Representatives who also spoke at the event were RaĂşl Grijalva (D), David Schweikert (R), Paul Gosar (R), Tom O’Halleran (D), Andy Biggs (R), Debbie Lesko (R), and Greg Stanton (D). 

They detailed current and upcoming legislation and proposals for issues important to Arizona: immigration and trade, military and veterans, forest health and climate change, new interstate highways, modernization of ports of entry, broader access for Mexican tourists to visit Arizona, and the national deficit.

They also discussed the status of the CARES Act and a new round of funding for those who are still struggling from COVID-19 shutdowns. 

Standoff over another round of relief 

As intended, the CARES Act that was passed in March, has helped citizens, businesses, schools and governments in Arizona survive the financial shutdowns.  

The Act has saved over 85,000 businesses and over 1 million jobs here, McSally said. 

Now, another, more targeted round is needed to help those who are starting to be left behind, she said.  

But unlike the first three rounds of relief funding, the divide between the two houses is stalling progress.

Wide divide between “skinny” and “fat” pandemic relief bills

Currently, there’s a huge gap when it comes to funding a package.  

Two weeks ago, Democrats blocked a Republican-backed “skinny” $300-billion package that targets those most in need while taking into account the nation’s soaring debt, now over $27 trillion. 

Democrats are expected to present a $2.2 trillion package to the White House this week. 

President Donald Trump, meanwhile, has indicated he would be comfortable with a $1.3 trillion package, according to by Reuters on Friday. 

If a compromise can be reached, a new CAREs package most likely would include:

• Renewed Paycheck Protection Program funding for industries hardest hit by COVID-19 including restaurants, tourism and travel.Ěý
• Expanded unemployment benefits.Ěý
• A new round of direct checks to Americans.Ěý
• Personal Protective Equipment for schools, nonprofits, healthcare providers and others.
• COVID-19 testing and research.
• Funding for education, low-income students and rural broadband access.Ěý
• Liability protection from frivolous COVID-19 lawsuits against businesses.
• Rent, mortgage and utility relief.

Arizona’s delegation champions for residents and businesses 

In closing, Â鶹´«Ă˝Ół»­ President and CEO Glenn Hamer thanked Arizona’s entire delegation for working across the aisle in the best interests of the state. 

While their political differences can be stark, he said, they have come together repeatedly to pass historic legislation like the Colorado River Basin Drought Contingency Plan to protect Arizona water supplies and the United States-Mexico-Canada Agreement that allows a border state like Arizona to tap into the largest free trade bloc in the world.

“We really appreciate how our very diverse political delegation works well together. I think it gives great hope to not only the state but the country,” he said. 

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Arizona, the nation and the world are starting to see some economic recovery on the tails of a global recession caused by the COVID-19 pandemic.  

Now, keeping that momentum going will rely on two major factors, including the willingness for governments to lend a helping hand to those who need it most, top economic experts said Wednesday during the s annual Economic Outlook 2021 sponsored by Cox Communications. 

The other major factor is how well countries can keep the virus in check, said presenters Elliott Pollack, CEO of Elliott D. Pollack and Company; Matt Stephani, president of Cavanal Hill Investment Management, and Scott Horsley, chief economics correspondent for NPR.

All three spoke about the impact of the virus and what lies ahead for the Phoenix region, the nation and the world. 

Here are some of the key takeaways:

New round of relief is essential for the “have nots”  

The U.S. has had more coronavirus cases per capita than most other countries, but it has been able to weather much of the financial toll because of the federal CARES Act passed in March. 

Through the Act, Congress has provided $3.1 trillion in relief for businesses and individuals, which has carried both the “haves and the have nots” throught the financial turmoil, economist Pollack said. 

But recent gridlock on a new round of relief could upend life for the “have nots,” placing them in a position where they are unable to pay monthly bills, he said. 

“Congress, the House and the Senate, have let politics get in the way of the need of the public and they have essentially muted the benefit from the $3.1 trillion.” 

He and Stephani both worry that Congress likely won’t act until after the election. 

Virus makes forecasting difficult 

The other major factor in recovery is the virus itself, the experts said. 

“In just a matter of months, the coronavirus has spread to every corner of the globe and almost everywhere economic contraction has followed in its wake,” Horsely said. “This is the first time in 150 years so much of the planet has suffered a recession at virtually the same time.”

Countries like China, which has taken “draconian” steps to shut down society to keep the virus at bay, are seeing stronger recovery. China’s movie box office sales, for example, are now almost to where they were pre-pandemic, Horsely said.

But others like Mexico and India that are seeing surges in cases do not have the resources or the willingness to provide stimulus relief. Their future is less certain. 

Personal savings to jump start recovery 

Stephani, who spoke from a national perspective, was optimistic about a fairly quick recovery for the U.S. over the next year and a half.

Americans have piled up record levels of personal savings and money market assets under stay-at-home orders, he said. The nation’s personal savings rate is averaging about 24 percent. Coming into the pandemic, the rate was only around 6 to 7 percent. 

In dollar terms, bank deposits are up $2 trillion from pre-COVID levels, Stephani said. Money market assets have risen from $3 trillion to $4.5 trillion.

If a vaccine or effective treatment arrives within the next year, consumer activity should explode with all that available cash. 

“That is dry powder that is going to come into the economy and when it does, it will move the economic needle,” Stephani said. 

Phoenix metro fastest growing major market 

Meanwhile, the outlook for the Phoenix region is very promising, Pollack said.

For the most part, the recovery of jobs in metro Phoenix has been “miraculous,” he said. Phoenix has recovered more than half the jobs lost when due to the pandemic. 

“While the United States was losing 98 percent of all jobs created between the last recession and February, greater Phoenix only lost 41 percent,” he said.

Many factors are responsible for the region’s healthier outlook, including federal relief from the CARES Act, a thriving economy prior to COVID-19, and Arizona citizens who have been masking up and social distancing to reduce the spread of the virus.  

Millennials and people over 65 will be buying homes 

Moving forward, most industries in the Phoenix region should see full recovery over the next two years. 

Housing will continue to be one of the strongest sectors, in part due to the virus, Pollack said. 

COVID-19 is causing people to want to leave high rents in small apartments in big cities to buy homes in more affordable locations like Arizona. 

Demographics will also benefit the Valley and the state as the two largest population groups, millennials and people over 65, seek to purchase houses over the next decade. 

Prospects for tourism, hospitality, restaurants 

Industries that have been hardest hit, meanwhile, will come back in force once  Americans can fully participate in the economy again, the experts said. 

Prop. 208 tax hike biggest threat to growth

One potential drawback for recovery would be passage of Proposition 208 in Arizona in the upcoming election, Pollack said.

Known as the “Invest in Ed” initiative, it would put the state in the top-10 of the highest income tax states in the nation. Under the initiative, Arizona’s top income tax rate would be raised from 4.5 to 8 percent – almost an 80 percent increase. 

In addition to deterring economic development here, thousands of small businesses that file their taxes under the individual tax code would be impacted. Many might not survive.  

“I’m not saying education doesn’t need more money; I’m saying, this isn’t the way to do it. Besides the inequity, you’re going to hurt economic development,” Pollack said. “We would go from the 15th lowest marginal personal income tax rate in the country to the ninth highest.

“It’s something that would come back to bite us.”

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Federal lifelines from the federal CARES Act are not only aiding small businesses and individuals in Arizona to survive the pandemic, they are helping schools navigate new challenges, as well.

In total, Arizona will collect $1.8 billion from the CARES Act. Of that, education is receiving an estimated $626 million. 

That relief has been “critical” for keeping students educated and safe as schools statewide cope with the financial realities of COVID-19, said Arizona Superintendent of Public Instruction Kathy Hoffman.

“Schools have incurred significant costs including providing necessary technology for distance learning, purchasing additional PPE, and implementing new mitigation measures to prevent the spread of COVID-19,” Hoffman said. 

No state budget cuts to education 

As other states are facing cuts in education because of the costs related to COVID-19, Arizona is not. One reason is Gov. Doug Ducey and the state Legislature’s previous work to budget for a $1 billion rainy day fund, which has proven critical for safeguarding education during the health crisis. 

Arizona’s booming economy prior to the pandemic outbreak is also a factor, local said. Add in donations, in-kind contributions and grants from businesses, municipalities and philanthropic organizations, and Arizona schools are better prepared than much of the nation to weather the pandemic.    

“A well-resourced rainy day fund, a prudent and carefully planned strategy for Arizona’s CARES Act allocation, and a regulatory and tax environment that encourages job creation have positioned Arizona well,” said Garrick Taylor, executive vice president for the Arizona Â鶹´«Ă˝Ół»­ of Commerce and Industry. 

Biggest expense for education: transition to digital learning

When the pandemic struck in March, schools and colleges had to turn on a dime to provide remote learning for more than 1.5 million K-12 and college and university students.

That has proven to be a costly and exhausting endeavor for schools statewide, said Jake Logan, president and CEO of the Arizona Charter Schools Association. 

“Everything happened really fast when schools pivoted to that remote learning model to make sure learning was not disrupted,” he said. 

One major expense for charter and district schools has been ensuring that low-income students and students in rural and tribal areas have computers and an internet connection, Logan said. 

CARES Act funding and donations from the private and public sectors have helped those students stay connected, Logan said.  

“I’m really proud of the education community — and I include the governor and Superintendent Hoffman — because they have made students a priority and really worked hard to make sure learning wasn’t disrupted, considering the situation.” 

How Arizona is using CARES Act funds   

To date, approximately $1.4 billion of Arizona’s allocation of $1.8 billion in CARES Act funding has been obligated for a wide range of programs to assist residents, employees, businesses and schools. 

CARES Act programs directly benefiting schools include the Paycheck Protection Program, the Elementary and Secondary School Emergency Relief Fund and the Governor’s Emergency Education Relief Fund.

In all, Arizona is projected to receive more than $626 million in funding for K-12 district and charter schools, colleges and universities. A total of $370 million comes from the Education Relief Fund to support K-12 schools districts and charter schools struggling with the added costs.

Other vital sectors in Arizona benefiting from CARES Act include:  

• Cities, towns and counties: $441 million
• Public assistance: $150 million  
• State public health and safety: $397 million 
• Arizona Department of Health Services: $64.4 million

Financial challenges ahead 

While Arizona is better off than much of the nation, education will continue to face additional costs from COVID-19, Superintendent Hoffman said. 

Hoffman and 28 organizations including the Arizona Association of School Business Officials, Arizona Charter Schools Association, Arizona Education Association, Arizona Rural Schools Association and Arizona School Administrators Association have asked the state’s congressional delegation for continued support for schools. 

“In the face of a global pandemic Arizona schools and educators continue to be a beacon of hope for our communities. In addition to providing vital nutrition services, schools are working overtime to meet the academic, social, and emotional needs of students,” Superintendent Hoffman said. “Schools will need ongoing resources in order to provide the critical support families in Arizona rely on.”

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Arizona is positioned for a faster economic recovery than the rest of the nation, and with some strategic moves on the part of state policymakers and citizens, it should jump back to a leading spot within next year or so, according to local economists.  

“We have the chance for this to be one of the best decades ever, but it’s going to take more work to be in the top five again in terms of economic activity,” said Jim Rounds, president of Rounds Consulting Group, Inc. that advises both public and private sector entities on matters of policy and economics. 

Rounds recently spoke to Â鶹´«Ă˝Ół»­ about why the state economy is outshining the nation and what is needed to keep that momentum going.  

University of Arizona economist George Hammond, featured in a recent Arizona Â鶹´«Ă˝Ół»­ of Commerce & Industry , says the most important step moving forward is for Arizonans to stay masked, socially distanced and sanitized. Hammond directs the university’s Economic and Business Research Center at the Eller College of Management. 

“If we can avoid a significant surge in the outbreak as we go through the fall and winter months, I think we’ll continue on a gradual recovery trajectory like a Nike Swoosh type recovery, getting us back to where we were before the pandemic by mid 2021 or in the second half,” he said. 

Tough lessons from Great Recession

Prior to the pandemic, Arizona ranked in the top five in the nation for personal income growth, job growth, population growth and overall economic activity. Much of that growth was due to policy decisions made after Arizona’s economy tanked during the Great  Recession of 2008, both economists said. 

In clawing its way back, the state put several economic pillars in place. One was Governor Doug Ducey’s $1 billion rainy day fund that has proven its worth during the pandemic.  

The state’s competitive tax rates, business-friendly regulatory environment and investment in workforce training and education also have helped put Arizona in a better position than other states, Rounds said.  

Arizona jobs’ picture better than nation

Currently, Arizona is No. 3 in the country in terms of jobs growth. 

Arizona’s healthier data is in part due to it being one of the fastest growing states before COVID-19 hit. Industries like construction and remote retail have stayed strong. Gov. Ducey’s early and gradual reopening of the economy also contributed to jobs and economic growth, Hammond said. 

Personal income bolstered by federal lifelines 

Personal income also got a boost from the bipartisan CARES Act passed by the U.S. Congress in late March to help keep Americans and businesses afloat during the coronavirus shutdowns. 

These lifeline programs have helped families pay their bills and put food on the table, Hammond said. 

In the first few months of the pandemic, CARES Act programs pumped more than $17 billion into the state’s economy including:

• Increased unemployment benefits: Unemployment compensation recipients in Arizona received an extra $600 tacked on to their weekly benefit of $240 for up to two months. That injected about $8.2 billion into the state, amounting to about 2.4 percent of the state’s total personal income last year.  
• The federal Paycheck Protection Program: The program, which provides grants to small businesses to keep employees on the payroll and pay company operating expenses, injected $7 billion into the economy early in the pandemic, representing about 2.1 percent of personal income in 2019. 
• Recovery rebates:  Rebates provided another $2 billion to citizens in the state.
• “So somewhere north of 5 percent of Arizona’s personal income last year was injected into Arizona’s personal income in just a couple of months,” Hammond said. “I think that’s had a significant impact in our ability to deal with the pandemic so far.”

Strategy for moving forward 

A state economic jobs package would be a good step forward to help reskill society, Rounds said. 

“We need to focus on high wage job creation and high tech and make sure universities are supported because they are going to be a supplier of this high wage workforce,” he said. 

Another measure that could stimulate recovery would be state assistance for the tourism industry, the hardest hit large sector, Rounds said.  

Currently, the tourism industry is down about 45,000 jobs. Additional state funding of $10 million a year could do a lot to stop other states from “stealing that pent up demand for tourism activity from under us,” Rounds said.

Meanwhile, state policymakers will have to work “very hard” to pull Arizona out of this downturn, Rounds said.  

“The concern now is, can we continue the momentum into the recovery? I think we can. People forget, we always outperform the U.S.

“When times are good we do better than the U.S. When times are bad, we’re even better.”

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While sectors of Arizona’s economy have suffered financial losses during the pandemic, the state is faring better than much of the nation, according to a leading economist. 

If Arizonans can stay masked, socially distanced and sanitized, it has a good chance for full recovery as soon as mid 2021, said the state’s heavyweight economic forecaster, George Hammond, a research professor and the director of the Economic and Business Research Center at the Eller College of Management at the University of Arizona.

“There’s a huge amount of uncertainty about how this is going to all play out and it’s connected to the outbreak and how the virus itself works,” said Hammond, who has been local and state economies for more than two decades from his university office in Tucson.Ěý

Hammond issued his latest projections and talked about how the state has managed to weather the pandemic at a recent , entitled Economic Forecast: Covid 19 Impacts on Arizona’s economy, hosted by the Arizona Â鶹´«Ă˝Ół»­ of Commerce and Industry.ĚýĚý

Arizona jobs’ picture better than nation

Among the reasons Arizona is hanging on are jobs and unemployment reports. 

In the early months of the pandemic, the nation saw 14.5 percent of jobs lost and has since recovered to 10 percent. Arizona’s is only 5 percent lower than where it was before the pandemic.

Arizona also has a slightly lower unemployment rate. In June, the rate was 10 percent compared with the nation’s 11.1 percent.

Arizona’s healthier data is due in part to being one of the fastest growing in the country pre pandemic, and industries like construction and remote retail remain strong. Governor Doug Ducey’s early and gradual reopening of the economy also contributed to jobs and economic growth. 

Personal income bolstered by federal lifelines 

Personal income also got a boost from the bipartisan passed by the U.S. Congress in late March to help keep Americans and businesses afloat during the coronavirus shutdowns.Ěý

These lifeline programs have helped families pay their bills and put food on the table, Hammond said. 

In the first few months of the pandemic, CARE Act programs pumped more than $17 billion into the state’s economy including:

• Increased unemployment benefits: Unemployment compensation recipients in Arizona received an extra $600 tacked on to their weekly benefit of $240 for up to two months. That injected about $8.2 billion into the state, amounting to about 2.4 percent of the state’s total personal income last year.ĚýĚý
• The federal Paycheck Protection Program: The program, which provides grants to small businesses to keep employees on the payroll and pay company operating expenses, injected $7 billion into the economy early in the pandemic, representing about 2.1 percent of personal income in 2019.Ěý
• Recovery rebates:Ěý Rebates provided another $2 billion to citizens in the state.

“So somewhere north of 5 percent of Arizona’s personal income last year was injected intoĚýArizona’s personal income in just a couple of months,” Hammond said. “I think that’s had a significant impact in our ability to deal with the pandemic so far.”

Economic forecast for coming monthsĚý

Hammond also laid out projections for an “alphabet soup” of pandemic recovery scenarios including:

• A 20 percent chance the state will see a rapid V-shaped recovery, where the economy will quickly bounce back from the downturn, then return to pre pandemic levels by early 2021.  
• A 30 percent chance for a W-shaped recovery — the worst case scenario — that would occur if there is a surge of the coronavirus combined with a virulent flu season, forcing the state back into a shutdown and economic distress. 
• A 50 percent likelihood for a “Nike Swoosh-shaped,” or baseline, recovery where a bottoming out is followed by a steady and gradual rebound.

“If we can avoid a significant surge in the outbreak as we go through the fall and winter months, I think we’ll continue on a gradual recovery trajectory like a Nike Swoosh type recovery, getting us back to where we were before the pandemic by mid 2021 or in the second half,” Hammond said.

That will depend, of course, on the state’s ability to keep the virus in check.

“We are learning where the big risks are and what we can do to reduce those risks and what we can do ourselves to get control of the outbreak. The sooner we have control of the outbreak, the faster things will go back to normal.”

To watch the webinar in its entirety, go to: Economic Forecast:

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As the American economy wobbles under the outbreak of COVID-19, small businesses across the nation have a lifeline thanks to the Paycheck Protection Program (PPP). Despite this massive federal stimulus, however, private enterprise still faces slumped demand, reduced spending, and regulatory burdens. This has put a strain on wages and forced many long-standing local businesses to close their doors.

In light of these economic conditions, Wells Fargo has transformed its stated commitment to promoting small business into reality. Donating $400 million in PPP transfer fees “back to nonprofits serving the small business community,” Wells Fargo has led the industry in supporting job creators and workers alike.

Open for Business Fund

“Community Development Financial institutions (CDFIs), nonprofit lenders and special purpose funds formed by CDFIs with an emphasis on serving racially and ethnically diverse-owned businesses are encouraged” by the bank to apply for said funds. This is an integral part of Wells Fargo’s commitment to stimulating growth for all Americans, especially those who have been disproportionately excluded from economic opportunity in the past.

As the United States and the rest of the world continues to weather the Coronavirus pandemic, the future is still unclear. But Wells Fargo has assured its customers that “[a]dditional grant cycles around technical assistance and long-term resiliency and recovery” will be open in the  future.

PPP impact

Already, the PPP has benefited thousands of American small businesses directly. And many of those who have received assistance are loyal customers to the stagecoach lender. In fact, 84% of PPP loan recipients through Wells Fargo have been businesses with 10 employees or fewer.

The bipartisan stimulus has provided aid through lending institutions to over , totaling $511 billion. Small businesses employ nearly half of all American workers, thus providing them with the extra liquidity necessary to bridge this recession is viewed as a primary objective of lawmakers in Washington.

More information on the details of the CARES Act’s PPP can be found .

A recovery for all

As corporations and citizens across the United States reconsider their strategies to eliminate racism and foster equal opportunity, Wells Fargo has made sure that in keeping industry afloat, the most vulnerable communities’ needs are at the forefront of the process. 

In its statement on diversity and inclusion, Wells Fargo says it is  “committed to advancing diversity and inclusion by helping ensure that all people across our workforce, our communities, and our supply chain feel valued and respected and have equal access to resources, services, products, and opportunities to succeed.”

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