With some governors lifting stay-at-home orders across the country, economic recovery from the COVID-19 pandemic is likely to come gradually and may vary by location.
That’s according to NRF chief economist Jack Kleinhenz, who said that it’s difficult to predict at this time when getting back to work or shopping in a pre-virus manner will occur as households are likely to” tiptoe back in rather than making an immediate return to the lives they experienced before.”
“As states begin to slowly reopen and assuming the coronavirus does not come back, the economy should begin a process of gradual recovery,” he said. “My overall impression is that the recovery will have fits and starts among states, regions and cities depending on the severity of the pandemic in their localities.”
Considering that the economy was buoyant up through the middle of March, the first-quarter decline “is likely just a murmur of how severely the pandemic has devastated many parts of the U.S. economy,” Kleinhenz wrote in the May issue of NRF’s Monthly Economic Review. “A much deeper contraction is expected during the second quarter.”
Kleinhenz noted that, in the end, shopping is more than a transaction.
“It is a social activity that is part of the fabric of American life, making it likely that consumers will want to return to normal shopping habits once the pandemic subsides and the economy fully reopens,” he said.
Consumer confidence has also taken a hit. The Conference Board’s Consumer Confidence Index was at 86.9 in April, its lowest level since June 2014, and consumers’ view of current conditions saw a record 90-point monthly drop to 76.4. But consumers’ expectations for conditions six months in the future were more optimistic, rising seven points to 93.8.
“The gap between opinions on current and future conditions indicates that consumers expect a V-shaped recovery as the economy reopens,” Kleinhenz said. “The survey also shows that few believe the economy is in as dire a financial condition as experienced during the Great Recession.”