ALEXANDRIA, Va. — While historic job losses and the potential of an economic recession in the aftermath of the COVID-19 pandemic are real-life concerns for Americans, a resurgence of economic activity on the other end as businesses reopen is likely, based on past circumstances and the current financial climate, said a speaker during the recently released NACS State of the Industry (SOI) virtual summit.
That will bode will for the convenience channel, which has maintained its foothold in the economy as many cities and municipalities have deemed c-stores essential businesses, said Anirban Basu, chairman and CEO of Sage Policy Group, Baltimore.
That’s not to say the outlook isn’t dire. New York-based Morgan Stanley is predicting the nation’s gross domestic product (GDP) will drop by 30%, Basu said. GDP during the recession of 2008 fell 8.4% in comparison.
Even before the coronavirus emergency, economists were concerned about the country’s 10-year growth in jobs and economic activity, set against the underlying warning signs of manufacturing losses, trade wars and both consumer and commercial debt. While baby boomers entered into “jobs they loved” in manufacturing and construction, that productivity is ebbing. Basu said younger generations are working in more dispassionate jobs, businesses are not investing in training and workers are not using the best equipment, he said.
Still, while not claiming to be an epidemiologist, Basu said “the best minds” are working on vaccines and therapies, and areas of Europe and even here in the United States have shown signs of moving past peak infection and death rates.
Also, Basu said inflation has remained low, allowing the Federal Reserve to lower interest rates to practically zero. He also predicted pent-up demand will be high. “People before [the pandemic] were wanting to buy cars,” he said, extending the analogy to homes. “Interest rates can only fall. And when supply runs out, inventory has to be replenished.”
Looking at past epidemics in Asia, Basu said he expects a “rapid recovery in activity” when the economy resumes. “It won’t be a complete recovery,” he said. “There will be a lot of empty storefronts and shattered businesses, but the initial recovery will be more dramatic—not a U [shaped curve], but a V.”
The 2020 NACS State of the Industry Summit Virtual Experience is now available for on-demand viewing. Access critical benchmarking data, analysis, emerging trends and executive insights at convenience.org/SOISummit.