Finally, a non-Pollyanish level-headed view of the U.S. economy’s likely trajectory post the worst of the coronavirus pandemic from someone inside Corporate America.
And no surprise it comes from the long-time CEO of payrolls and HR services giant Paychex, Martin Mucci.
“Right now it appears that it is going to be fairly deep [the economic downturn] and it’s going to come back a little slower. Originally many of us thought it would be more of the V [shaped recovery. I think it might be more of a U [shaped recovery]. Restaurants, businesses like that, are going to have to open slowly and then grow more in capacity and so forth and get the revenues back to where they were pre-COVID,” Mucci said on Yahoo Finance’s The First Trade.
Paychex boasts 670,000 payroll clients with a strong exposure to small- and medium-sized businesses. The company pays one out of 12 American private sector employees. So who better to serve up an honest assessment on the way forward for the economy?
Mucci says Paychex has been working closely with businesses to wade through the CARES Act.
Despite the new stimulus plans for businesses, Mucci acknowledges the coronavirus pandemic — which has sent more than 26 million in the U.S. to the unemployment lines — has weighed on Paychex’s business. But it has also opened up new opportunities for Paychex, notably on the HR side as companies seek to outsource services to save money.
“Yes, certainly we have seen checks decrease with 26 million unemployment claims. So checks are down. They have come down. Some losses and clients completely out of business. More are kind of stalling, or kind of suspending business. And you have seen a number or small companies who did payroll on their own come to us and say we can’t do this anymore, it’s too complex,” Mucci said.
Paychex shares are down about 18% year-to-date, relatively in line with rival ADP’s drop. The S&P 500 has shed 12% this year.
For its current fiscal year 2020 that ends in May, Paychex sees sales up close to 9% down from a prior forecast of 10% to 11% growth. In its fiscal year 2021 period, Paychex has guided to flat to down low-single digit sales growth reflecting the impact from challenging economic conditions.
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