About that ‘V-shaped’ recovery
If you pick through the recent musings of Wall Street’s wonks, whether on the economic or corporate side, you’ll find one discernible trend: analysts trying to figure out how fast we return to ‘normality’ once we emerge from our hovels.
There are various approaches to this, but they typically revolve around modelling a set of different outcomes post-pandemic and then weighing them by probability. To inform their predictions, analysts can utilise third-party data — credit card, traffic, electricity prices, etc — to figure out which industries, countries or companies are in the process of recovering. Soft data, like a survey, may also help those industries, like cruise ships, which are still in a coronavirus crunch.
Jefferies, the investment bank, has leaned towards the latter. And on Tuesday released the results of a survey of 5,500 consumers across 11 countries. The questions? Well, glad you asked:
We asked over 50 questions, covering everything from health, employment, attitudes to government policy, spending habits, personal investments, exercise and more. There are implications for most sectors, including Consumer Staples, Retail, Internet, Telecoms, Financials, Housebuilders, Healthcare and Video Games
The results are not that surprising. For instance, respondents were deluded optimistic the crisis will shake things up for the better. However, what FT Alphaville did find of note was how consumers might direct their spending once the crisis has abated.
For those hoping for a uniform V-shaped recovery, look away now:
Yes, looks like all of that pent-up demand we’ve heard so much about might take a while to filter through to the tills of the retailers, particularly those that specialise in non-essential goods. There is also clearly a return-to-work component to this, as a lot of discretionary spending is predicated on workers being in the office, where they might pass shops at lunch, or on the commute home.
But that’s not the worst news by sector, just take a look at this data for holiday bookings. Gulp:
Alphaville has been discussing, with both our colleagues and those that are unfortunate enough to be locked down with us, how the travel market might look after coronavirus. One suggestion has been that we may see a flowering of local holiday destinations — think Blackpool, Mablethorpe or Margate in the UK — if flying is perceived as too dangerous, or becomes more expensive due to a shift in the supply/ demand imbalance.
Whatever the outcome, this also spells out how unprecedented a time it is for the airlines, cruise ships and booking agents — online and offline — who have seen their businesses dismantled by the coronavirus. It seems like the pain is going to last far longer for these businesses than most have imagined.