WASHINGTON D.C.: Federal Reserve research indicates that fewer than 200,000 businesses in the United States may have failed during the first year of the COVID-19 pandemic, with relatively little impact on unemployment, contrary to forecasts indicating the pandemic would leave America’s “Main Street” desolate.

Some 600,000 businesses, especially small firms, are likely to fail in any given year, and U.S. central bank researchers estimated that from March 2020-February 2021, the figure has been 25 to 33 percent higher than normal.

Close-contact services, such as barber shops and salons, which the Fed research group said were the hardest hit by the pandemic, included 100,000 “excess” failures.

While potentially devastating for the owners and employees of those firms, “relative to popular discussion … our results may represent an optimistic update to views about pandemic-related business failure”, the authors wrote.

On the other hand, carry-out restaurants, grocery stores and outdoor recreation companies reported fewer failures than usual, with the net result being a smaller-than-anticipated setback to the overall economy.

“Many industries have likely seen lower-than-usual exit rates, and exiting businesses do not appear to represent a large share of U.S. employment,” the researchers wrote.

The study was the latest to reflect that economic recovery was progressing faster than expected, with Fed officials confident that much of the potential permanent damage had been avoided.

Fed researchers acknowledged that more failures could occur if, for instance, banks, landlords and creditors become less flexible with their business tenants as conditions return to normal.

While the study does not account for the millions of jobs lost at surviving firms or the disproportionate losses felt among racial or ethnic groups over-represented in the most devastated industries, it suggests small businesses were more resilient than anticipated and were propped up effectively by loans from the Paycheck Protection Program (PPP) and other federal aid.

The Fed and the U.S. government flooded the economy with credit and outright grants for businesses and households last spring, leading to personal incomes rising, even as unemployment spiked to historical levels.

The funding included $755 billion in forgivable PPP loans spread across more than 9.5 million firms.

Official government statistics on business failures typically lag behind the actual demise of those firms by one year or more. The Labor Department’s Bureau of Labor Statistics and the Commerce Department’s Census Bureau have not yet released any formal estimates on the pandemic’s final toll on companies and their workers.

To augment the scarce data, the Fed researchers combined available government information with measures, such as cellphone location data mapped onto retail locations, records from payrolls processor ADP, and other sources.

They noted that while early fears of a large COVID-19 hit may have been warranted, by the end of August there was “no evidence of excessive, ongoing business inactivity; in fact, shutdowns were well below normal by late 2020.”