The Pandemic Economic Impact – Some Early Reports
Here are some early observations of the impact of the pandemic measures and its domino effect on the economy. It looks like their is nothing left in it its wake as it ripples through the economy has we are seeing people’s world collapses around them as we are seeing personal wealth decrease, incomes and job losses and a stalled economy that will not be functional in the short term. We have seen tourism, air travel, gas, advertising and pro sports sectors turned upside down during this period. There has been changes in consumer behaviour that we have documented in our market research report from Bruce Neve , President of True Media Services.
Workforce Confidence is Low
Canadian workers are undergoing a period like no other, whether you’re running a business or taking charge of your own career. LinkedIn has created a new Workforce Confidence Index that is a biweekly snapshot based on a poll of 1,000+ members in Canada on how people are feeling about their job, financial and career outlooks. The index uses a scale from -100 to +100 to reflect professionals’ current sentiments about the labour market, their careers and their expectations going forward. Key findings from the inaugural report (data collected April 1-7) include:
- Confidence is outright negative among active job seekers (even those who are currently employed) at -3, and notably low among the self-employed at 10.
- Workers director-level and above are more negative about their companies’ prospects in six months compared to non-manager employees.
- Over half (56%) of those surveyed have cut back on their personal spending in the past month.
- More than half of employed Canadians (62%) are being offered the option of working remotely in response to COVID-19.
- Roughly a quarter of employers are offering flexible or part-time hours in response to the pandemic, and a similar number are offering additional time off, either paid or unpaid.
Personal Wealth Take a Nose Dive
Reports from individuals of seeing their life savings disappear as their stock portfolios take 20% plus hits on their value. Here is is a summary from Statistica of all the major stock indexes from around the the world for the first quarter of 2020. Yikes! Time to buy Gold.
Big Ticket Items like Cars and Homes see demand take a Dive, but DIY Home Renovation projects go up
With job security uncertain couple along with declining incomes will have a major impact on interest rate sensitive or large ticket products like real estate and automobiles. It is pretty hard to sell a house and car as they touch and feel products and with the rules now Open House is not practical in real estate of test drives in carts. We are seeing a shift to home DIY renovations projects as homeowners try to stay busy.
Local Retailers making it safer to shop
Shopping today is moving toward more on line ordering with curbside pick options or home delivery. Yes you are doing transactions now in parking lots now, just like buying on Kijiji or before cannabis was legal. There are stickers or tape on the floor or ground to provide social distancing guidelines with plastic shields at checkouts for grocery stores and take out food. Line-ups at drive-though fast foods are during a steady business. Cash now is not king, your debit or credit card are used for purchases. T&T Supermarkets have gone one step further with temperature screening at all their stores in Canada.
Small business are dealing with negative cash flow
Even with the government aid most business will still have a negative cash flow and it is not sustainable and at one point will have to decided between being safe, survive and financial bankruptcy. This may force people ( Hairstylists, Nails, Auto Repair) to open and start doing business discreetly by appointment only to make ends meet. Doctors are now doing telephone appointments, so this is already happening.
Medical Products Demand has Companies Re-tooling
Some companies have made a major business strategy pivot and retooled on the fly to pitch big government contracts for medical supplies. The federal government for example is trying to purchase 16 million face shields and a lot of companies are in the race.
Financial Sector provides a little debt relief but needs more compassion
Banks are trying to help by being agents for government subsidies and loans, but banks have stepped up as the big six TD Canada, Scotiabank, National Bank, RBC , CIBC and BMO are offering 6 month mortgage deferrals . Credit card robo calls are still happening though for late payments so credit card companies to need to step up.
Most schools are shut down and teachers are scrambling to help students finish the school year. Quebec though is opening the schools on May 11 for daycare and elementary students. School Boards are considering online options, but they have limited appeal to high risk students as online learning only attracts the students with good grades. Companies are now providing free resources to help parents to home school their children. If you like to see who is helping you can find what is available at #Teachmag.
The Herd is getting Restless
There is a growing voice that the cure is worse than the disease as the side effect of these health measures is creating a financial disaster to over 25% of the economy that is growing and patience is wearing thin in some folks. Future measures must be in place that treat people as intelligent beings that are capable of making informed decisions versus treating them like dumb cattle in an authoritative approach. With this scenario unfolding expect the litigious nature of our friends to the south of the border as lawsuits will be filed to cast blame.