Extending a Lifeline to the Engines of the American Economy
By Candi Wolff, Executive Vice President, Global Government Affairs, Citi May 13, 2020 04:00 PM
With eight out of 10 U.S. jobs in services, the services sector is the lifeblood of the U.S. economy. Services enable all economic sectors – from healthcare to manufacturing to agriculture – to be more productive, reach more consumers, and ultimately, contribute to a better livelihood for Americans through job creation, higher wages and greater opportunities.
Yet, a recent report released by the Institute for Supply Management, revealed that the services sector shrank for the first time in a decade. This shouldn’t come as a surprise, given the breadth of the economic shutdown caused by COVID-19, yet it’s an important reminder of how critical the services sector is to our recovery.
The make-up of Citi’s Paycheck Protection Program (PPP) loan portfolio demonstrates the great need that our small business services customers have for this critical lifeline. Roughly 86 percent of Citi loans in this Small Business Administration program have gone to small businesses in the services sector, like healthcare and professional services. The hard hit healthcare sector, for example, which shed 1.4 million jobs in April – in the midst of a health crisis – accounts for more than $450 million of the more than $3 billion in PPP program loans Citi has funded, second only to the Professional Scientific and Technical Services businesses, which received $600 million in loans.
The reality is that services are all-encompassing, and they are the engines of the U.S. economy. Some of our country's most innovative companies are in fields such as financial services, express delivery, media, telecommunications and IT services. Small businesses depend on services, and most small businesses are actually services providers themselves. They rely on services like logistics, payment processing, and the expansive reach of digital platforms to compete successfully in the global market.
COVID-19 has starkly illustrated the importance of services in all aspects of our lives. Messaging and virtual conferencing services have helped colleagues and families stay connected while physically distanced. Logistics services have enabled the safe, efficient transport of lifesaving medical supplies and food products. Pharmaceutical and medical equipment manufacturers, including companies assembling ventilators, all rely on digital services, from the software used in the manufacturing process to smart technologies embedded in the technologies themselves. The role of services in sustaining lives, communities, and our economy has never been more clear.
Citi and other financial services companies have served as a delivery mechanism for government stimulus funds and loans to millions of American families and small businesses.
Getting much needed funding to these service industry businesses is vital not just for the short-term survival of each business but also for the long-term health of our increasingly service-driven economy.
Candi Wolff serves as a chair of the Coalition of Services Industries, an association that represents the interests of the dynamic American service economy.