NEWS THAT quarterly growth contracted significantly in the world's second biggest economy (China) for the first time in 28 years, skyrocketing jobless numbers in the U.S., and warnings from oil cartel OPEC that demand has fallen to a 30-year low have many wondering if it really will be business as usual once the coronavirus pandemic is over.
An Ipsos survey shows people have some serious doubts, despite reassurances from many governments, that we will see a quick recovery in the economy once the outbreak is under control. The majority of people in 10 out of the 15 countries surveyed say a quick economic recovery is unlikely once the lockdown from the pandemic is lifted, with this sentiment highest in hard-hit European countries. People in Spain (76%) and France (72%) are most negative about a quick recovery, followed by those in Italy (68%), the United Kingdom (67%), Russia (65%), and Japan (64%).
A combination of uncertainty over when the shutdowns will end, a resulting loss of wealth, the speed and depth of the downturn, and the risk of a new outbreak without a vaccine all are factors weighing on people's confidence about the economy bouncing back.
Doug Porter, chief economist at BMO Financial Group, says the reality is that the virus is in charge and, until we have better clarity on the path infections take, people cannot be fully confident on where the economy is headed. "The fact that people have been directly affected--whether through their jobs or their investments--likely makes them wary about a broader economic recovery. The fact that job losses have been so widespread and affected so many people directly accentuate the impact."
April's Ipsos Global Consumer Confidence Index fell to its lowest level in more than seven years--since December 2012. Meanwhile, The Expectations Index, which reflects consumers' outlook on their job, financial situation, and local economy, showed an even bleaker picture--declining four points lower than at any time in its decade-long history.
Royce Mendes, senior economist at CIBC Capital Markets, indicates that "it will not be business as usual until consumers feel comfortable eating at crowded restaurants or taking a leisurely stroll through a mall. Whether or not governments lift restrictions on activity, that won't happen until there is a vaccine. Many companies will be able to bounce back nicely. Unfortunately, though, there will be some businesses that don't survive the period of shutdowns."