Economic Recovery May Vary By Location: NRF Chief Economist
The National Retail Federation’s Chief Economist Jack Kleinhenz believes the economic recovery in the United States from the Coronavirus crisis would come gradually and may vary by location depending on the severity.
His remark comes as more and more stores are reopening across the country after at least 30 U.S. states began easing lockdown restrictions and decided to reopen businesses despite soaring coronavirus deaths.
In the May issue of NRF’s Monthly Economic Review, Kleinhenz noted that the economy should begin a process of gradual recovery now assuming the coronavirus does not come back.
Kleinhenz said, “Getting back to work or shopping in a pre-virus manner is difficult to predict at this time, with households likely to tiptoe back in rather than making an immediate return to the lives they experienced before….My overall impression is that the recovery will have fits and starts among states, regions and cities depending on the severity of the pandemic in their localities.”
The pandemic has wreaked havoc on the U.S. and global economies and it could take several months to assess the full consequences and project a path forward.
In the first quarter of fiscal 2020, U.S. gross domestic product shrank 4.8 percent, hit by the coronavirus crisis, after an annualized growth rate of 2.1 percent at the end of 2019. NRF, the world’s largest retail trade association, said it was the largest drop since 8.4 percent in the fourth quarter of 2008 during the Great Recession.
In March, retail sales fell 8.7 percent from February, the worst month-over-month drop on record. Consumer spending declined an annualized 7.6 percent during the first quarter, the largest drop since the second quarter of 1980.
According to Kleinhenz, the recent decline is likely just a murmur of the destruction the pandemic has created on the U.S. economy, while much deeper contraction is expected during the second quarter.
The retail industry has been hit unevenly as stores that remain open have had customers for essential goods, while those closed temporarily have to struggle.
Amid the ongoing crisis, retailers Gap, Inc. Thursday said it plans to re-open up to 800 stores by the end of May, while Kohl’s Corp. intends to reopen stores in 10 states on May 11. The company, which opened stores in four states earlier this week, said it will open additional Kohl’s stores in the coming weeks.
Meanwhile, Walmart’s CEO Doug McMillon has predicted that pickup and home delivery will now become the “new normal” as the retail industry will change significantly due to the coronavirus pandemic.
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