Page 2 - COVID pandemic will end, and businesses should plan for it 11.24.20

12/3/2020

Why? Because those old spending habits existed for a reason; they satisfied basic human needs

and wants. COVID-19 hasn't extinguished those needs and wants. We still like traveling, going to
movies, eating at restaurants, attending sporting events, concerts and plays. A powerful but

temporary external force has artificially suppressed demand for these experiences. Demand will
spring back when that force fades away.

As spending revives, so will hiring. Unemployment soared by 14 million between February and May,
a faster rise than the country experienced during the Great Recession. Although the unemployment

rate has declined to 6.9 percent from an April peak of 14.7 percent, about 11 million people are still
out of work, nearly twice as many as a year ago. Many worked in service industries likely to benefit
most from rising demand.

The rebound will be strongest in sectors hit hardest by the downturn—airlines, hotels, restaurants,
and other tourism- or entertainment-related businesses. Companies in these industries have cut
deeply to survive devastating revenue declines, laying off tens of thousands of workers, closing

outlets and reducing service.

The cutbacks kept companies afloat in a rising tide of red ink. But they could become liabilities when
customers return. Companies unable to meet surging demand risk losing customers to rivals that
either cut less or restore capacity faster.

It may be hard to think about adding staff and boosting investment when states around the country
are tightening restrictions in response to rising coronavirus cases. There may well be another leg

down for the economy before vaccines reach most people.

"The recovery has been slowing down," says Tannenbaum, warning that unemployment benefits for

millions of workers idled by the pandemic are running out. In another worrisome sign, initial jobless
claims ticked up during the week ended Nov. 14, ending a string of weekly declines. Without more
help from Washington, the unemployed will be hard-pressed to buy groceries, pay rent and make

other purchases that support the economy.

Still, the potential for another short-term slump doesn't mean a powerful recovery isn't coming when

vaccines subdue the virus. Companies should plan accordingly. After all, the only thing worse than
suffering the economic agony of the pandemic would be missing out on the ensuing recovery.

Source URL: https://www.chicagobusiness.com/joe-cahill-business/yes-pandemic-will-end-its-not-too-early-start-
planning-it