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The Second Wave

May 15, 2020

How would a second wave of COVID-19 impact the economy? We’re watching the trends – catch our newest TrendsTalk episode with ITR President and Speaker Alan Beaulieu to learn more.


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The below transcript is a literal translation of the podcast audio that has been machine generated by Rev.

Alan Beaulieu:
Hi, this is Alan Beaulieu, president of ITR Economics. I'm really glad that you're with us today.

I want to talk to you today about something that's on, I think most Americans' minds, and that is the second wave. Of course, we mean will there be a second wave of corona cases, leading to a second wave of corona deaths, leading to all kinds of other shutdowns at the state level, problems at the federal level? Is it coming, what will it mean, and should we be worried? Those are great questions, by the way.

I can tell you that here at ITR Economics, we'll be tracking data, as it becomes available on a weekly basis, out of states that are opening up. We are tracking it on every state, and as they open in particular, we'll be seeing what's happening in terms of cases, which is not as important as looking at hospitalization trends and at deaths. We never thought we'd be in that position here at ITR, by the way, is just to track deaths by state owing to a particular virus. But here we are, and we're doing it. As we do that, we'll be able to see if that wave is going to be larger than the wave that first came upon us that led to a shutdown.

Now, if it's not as large, we are assuming that we will not have another shutdown of the economy. If it is a large wave, and the governors and the other powers that be deem that it is necessary to protect the population with another shutdown, then that changes everything.

All of you that have heard our forecast for GDP and CAPEX and industrial production and for the world, it's going to change. So please keep track here at TrendsTalks, and with the trial, free trial of our ITR Trends Report. Because if there's a second wave in enough states, and if there's a shutdown, we will let you know, as soon as possible what the new forecast is going to be, and what it means. Now, having said that, we don't think that will be the case or else we would not be forecasting what we are forecasting.

What we are doing also, besides looking at the COVID by state, is we're looking at retail sales. Now, retail sales by the week comes from us from Johnson Redbook. It's a weekly index that we use, and it's a fantastic data series. It's just absolutely marvelous, and it allows us to see what's happening in total for retail sales, and it also by discount stores and by department stores.

Now, department stores had fell off the face of the Earth, as you can imagine, with the shutdown. As states have started opening up, it's amazing to see how quick the rebound is occurring in discount, excuse me, in department store activity. Now, we're still 37.6% below year ago levels, but we're almost ... almost went down vertically, and we're going back up vertically, so that the lines appear to be line. So those that thought consumers are just not going to go back out, it doesn't look like that's the case. Now, that trend has a long ways to go to normalize. But it certainly is very encouraging now. For those that thought we're going to buy everything online from now on, there will be no more brick and mortar, we don't want to go out, we can't make ourselves go out, that doesn't seem to be the case so far either, off of the limited data. Stay with us. We will let you know if that trend continues, but at least it is very encouraging.

Total retail sales are seven-and-a-half percent below year ago levels for the week, from this index. But they have also started to bounce up. That's key. Retail sales bounce up with these reopenings. The economy goes back on track. The economy begins to go back on track, is what I should say. As it begins to go back on track, we will begin to see people come off the unemployment rolls, back into their jobs. Back into jobs means that they're earning money, they're paying their rent, their mortgages. That means that they're buying things. It means the economy continues to gain upward momentum, and we can go back to the new normal, whatever that will look like. We'll certainly deal with that in another Trends Talk episode. But for now, the good news is there's some increased activity in retail sales. We're tracking the data. We don't see anything yet that's alarming, but we'll certainly let you know if that comes about. So far, so good. We're on our way. We're looking at an encouraging future.

Thank you for joining me today. I appreciate it. I hope you have a great day. Plan ahead with some confidence.


Since 1948, we have provided business leaders with economic information, insight, analysis, and strategy. ITR Economics is the oldest privately held, continuously operating economic research and consulting firm in the US. With a knowledge base that spans six decades, we have an uncommon understanding of long-term economic trends as well as best practices ahead of changing market conditions. Our reputation is built on accurate, independent, and objective analysis.