With COVID-19, over 400,000 lives worldwide have been taken to date, millions have lost their jobs, global supply chains have been disrupted, and economies have staggered. All within a matter of weeks. Economists predict a global recession that will take years to recover from, and journalists tell us our lives will never be the same post COVID-19. But how much of this is politicking and sensationalism, and what do they really know? After all, no economic model has been trained for a pandemic. Big Data Federation’s approach – grounded in real-time data – suggests an outcome that runs contrary to much of mainstream media. We are seeing meaningful signs of consumer confidence that will drive economic recovery in the months and quarters ahead:

  • Demand: Consumer spending accounts for ~68% of the US economy. Consumers virtually pay for everything. The sharp decline in consumer spending during the pandemic has been in service-related industries and durable goods sectors. Most of the impacted categories (healthcare, transportation, food services, auto parts) are essential to our daily lives and will recover fast. For instance, the decline in healthcare spending has mostly been related to a sharp drop in elective surgeries; these won’t be delayed indefinitely;
  • Buying power: Personal savings rate (as a percentage of disposable personal income) was at a whopping 33% in April 2020. To put this in perspective, the average savings rate pre-COVID-19 was 7.9%, and during the 2008 financial crisis averaged around 5.5%. These data indicate that consumer buying power is at an all-time high. With the easing of stay-in-place sanctions, people will again have opportunities to spend money. We will be keeping a close eye on this metric;
  • Fear subsiding: The latest mobility data indicate that folks are coming out of their shelters. In the US, the use of direction apps (such as Apple Map) is 47% above the January 2020 level. Continental Europe is showing similar mobility growth, and even the UK is catching up fast. While still way below pre-COVID-19 peaks, air travel is also growing since it bottomed out on April 14, 2020; our data indicate leisure and short-haul flights are accelerating faster than long-haul and business travels as people’s fear of COVID-19 subsides;
  • Stimulus package: Governments forced shutdowns and they paid for it. In the U.S. alone, stimulus packages have injected approximately equivalent to 11% of the U.S. GDP into the economy;
  • Real estate: For most of us, real estate is the single largest investment we ever make in our lives. Thus, real estate prices remain the most important barometer of consumer confidence. The average purchase loan size is up 8.8% since they bottomed on April 3, 2020; a strong indication of real estate price growth. The average income of homeowners in the US is above $90K, most of whom survived the job cuts. Fannie and Freddie are in standby mode to buy into any foreclosure in order to keep afloat the residential market.

 

Second quarter earnings will be dismal for many industries and should be written off as we look beyond the shutdown. People want to resume their normal lives. We are social beings; our very survival depends on being together. A few months of lockdown is not going to change that. Data are already indicating a healthy recovery and potential economic acceleration all the way into 2021 fueled by consumer spending power, job recovery, and pent-up demand.

 

E-life was cool but let’s get back to real life.

 

Disclaimer: Analysis is barring further shutdowns due to widespread COVID-19 flareups.