The COVID-19 pandemic has had devastating economic effects across the country since March. To slow the spread of the virus, some businesses closed, leading to spikes in unemployment and a serious economic contraction. For college towns like Athens, the risk may be even more acute. The University of Georgia’s transition to online classes during the spring semester reduced the city’s customer base. For the future, canceled events and a scaled-back college football season could hurt Athens businesses further. Athens could have a difficult few months ahead, and it is up to the community to support the local economy.
Communities like Athens had previously seemed resistant to recessions because of their dependence on college campuses. That is not the case now. College towns are faced with the difficult task to try to support businesses as much as possible while also keeping cases down.
It has not been all bad. According to Athens Downtown Development Authority Director of Planning and Outreach David Lynn, local restaurants that already had established take-out operations have been able to make the transition more smoothly, with some even gaining customers they otherwise would not have had. Lynn said downtown Athens has had "a minimal amount of closures," some of which already wanted to close down.
Although some businesses are doing well, the broader picture shows Athens’ economy is still far from normal. Notably, the pandemic has taken a toll on consumer spending, a key aspect of the economy. According to an analysis of credit- and debit card data from Affinity Solutions by Opportunity Insights, a research organization at Harvard University, total spending by consumers in Clarke County fell by a seasonally-adjusted 8.2% as of July 26 compared to January. Consumer spending has been trending down since the start of July. Now that the weekly $600 unemployment enhancement has ended and Congress has yet to pass an additional economic stimulus, consumer spending might drop more.
David Bradley, the president of the Athens Area Chamber of Commerce, said that cuts in unemployment benefits could hurt spending. Bradley believes that the federal government’s “financial response to the pandemic was extraordinary,” arguing that it allowed businesses to keep people employed and people to keep living their lives. According to Bradley, the economic stimulus created confidence. However, cuts to stimulus could dent consumer confidence and weaken the recovery.
The recession has hit some industries much harder than others. According to Bradley, the highest risk sectors are retail, restaurants and hospitality. Hospitality likely has the biggest long-term risk. Bradley said that hotels generally need about a 65% occupancy rate to turn a profit, but there were periods during the pandemic where the hotel occupancy rate fell to the low teens or below 10%. With a reduced football season this year, it could take a long time for demand to fully recover for hotels.
The recession has certainly been challenging for Athens restaurant Thai Spoon. According to Frederic David, who owns the restaurant with his wife Kanjana, they have lost “about 70-80% of our business.” He said Thai Spoon offers takeout but has closed the dining room to protect workers and customers from the coronavirus.
The downturn has hurt workers too. Lauren Leighton, a senior culinary science and nutrition major at UGA, lost her job at Ben & Jerry’s, although she expects to be hired back.
“We closed right after spring break ended,” Leighton said. “That Sunday right before school was supposed to start back up, we just closed down … We’re working on opening right now.”
While out of work, Leighton has received unemployment benefits. Though she expects to be rehired, she believes that the federal government should extend the unemployment enhancement to help those who have permanently lost their jobs.
And with a scaled-back football season, the situation may get worse in Athens. The UGA football team was originally scheduled to play six games at Sanford Stadium. However, now the Bulldogs will only play four games in Athens. To make matters worse, there is a good chance there will be no fans or a limited number of fans in the stadiums, likely reducing the number of people who will travel to Athens for home games.
Bradley said many fans come to Athens for home games without actually entering Sanford Stadium, something he hopes Athens can replicate this year. That could certainly help, but it will probably not fully make up for six games with a filled stadium.
The Athens economy is in a fragile position. UGA’s move to online classes in the spring and canceled events in the city have taken a toll, and the possibility of less revenue from football and suspension of in-person classes pose future risk.
Athens is fortunate to have had relatively few permanent closures so far. However, with a reduced football season and the possibility of a reduced stimulus from the federal government, it is more important than ever for the community to support local businesses as much as possible.