Economic insights: COVID-19

Anna Miller & Ryan RothJune 5th, 2020

Macroeconomic Summary

Gross Domestic Product

Personal Income

Easing Unemployment

Housing Prices

United States GDP growth

2020 GDP growth: -6.2%• GDP decline in 2020 revised upward• Annualized growth rate of 0.5%

between 2015 and 2020• Decline driven by a decline in

consumer spending and business investment

• Q2 results expected to be worse• Filings for Chapter 11 rose 48% in

May

Easing Unemployment

2020 projected unemployment: 10.3%• 21.5 million people receiving

unemployment benefits• Layoffs continue• New applications have begun to

trend down• Unemployment rate fell to

13.3% in May

Saving vs Spending

Personal Savings in 2020: 12.2%• Record hit in April at 33%• Relief programs have temporarily raised

income• Deferred mortgage, rent and debt

payments• Likely to be temporary• Personal income grew 10.5% in April• Consumer spending fell 13.6% in April

Housing Prices

2020 Index Growth: 1.1%• Growth slows significantly but

remains positive• Number of sales, new listings

declined• Housing supply remains low• Low mortgage rates will continue

to drive demand• Housing prices will move in line

with residential construction

Reopening the Economy

Manufacturing

Retail

Entertainment and Food Services

Looming Concerns

Commercial Real Estate

Manufacturing

• Manufacturing capacity utilization expected to decline in 2020 due to plant shutdowns and supply chain disruptions

• Total trade value is down in 2020 amid supply chain disruptions, but expected to pick up as manufacturing activity resumes

• Some non-essential manufacturers allowed to open during Phase 1 of state openings

Entertainment and Food Services

• Phase 1 openings in most states allow only curb-side pick-up, while some even allow limited dine-in service

• Most recreational outlets, such as movie theaters and amusement parks, are expected to remain closed

• Percentage of services conduced online expected to rise significantly in 2020, with online entertainment consumption at the forefront

Retail

• While e-commerce activity is heightened, consumer spending is still down

• There has been a spike in business bankruptcies in 2020, especially in the Retail sector

• Retail establishments are expected to remain mostly curb-side pick-up only during Phase 1, while some states allow for limited in-store visits

Commercial Real Estate

• Interest rates expected to remain relatively low

• Nonresidential construction activity expected to decline significantly in 2020

• Reduced client pool in 2020 amid declining number of businesses and low consumer confidence

Looming Concerns

• Rising student loan debt

• Inflationary pressures

• Business bankruptcies

• Second wave of COVID-19 (coronavirus)

For More Information

www.ibisworld.com

www.ibisworld.com/industry-insider/us/

www.ibisworld.com/coronavirus-industry-exposure/