Recently, business owners and consumers alike have been overwhelmed with news concerning the novel coronavirus, or COVID-19. The sheer volume of reports, both factual and speculative in nature, is a direct result of a collective desire to understand how severely the pandemic will impact our daily lives as we journey into uncharted territory for the first time in modern history. Experts at J.P. Morgan predict the coronavirus will have a more devastating impact on Q2 2020 than anything the U.S. experienced during the 2008 financial crisis. As current events unfold, precipitating an expected double digit percentage annualized reduction of the U.S. economy in the next two quarters, many have turned to the media and trusted sources to help them understand the impact. Unfortunately, even veteran entrepreneurs and financial experts have experienced substantial difficulty with parsing out which nuggets of information are helpful to their health and wellbeing, as well as the survivability of their companies.
There are lessons to be learned in all of this but uncovering some of them requires a shift in perspective, a deviation from the norm. While COVID-19 represents an unprecedented challenge to our way of life, the best way to endure this hardship is to focus on the facts instead of the fears, and, as a business owner or investor, the potential opportunities that will be created because of it. Identifying specific opportunities to grow and strengthen your business despite all the negative press surrounding the pandemic will have an ameliorating affect for you and will help shape the future landscape of your Company. Moreover, working proactively to create solutions can help stymie further economic setbacks, significantly boosting recovery from this event.
-Key Health Notes-
Health professionals recommend social distancing to slow the spread of disease, as voluntary quarantine can significantly reduce our collective exposure to COVID-19. In countries like China and South Korea where the virus first hit, social distancing and sheltering in place has had a very positive effect. South Korea has already reported a sharp decline in new cases of the coronavirus while China reports very few new cases per day at this point. Data published by Chinese scientists suggests that most cases are mild, with only 2.8% of cases in men and 1.7% of cases in women resulting in death. To date, 87% of those infected in China have completely recovered from the virus. In the U.S., a vaccine trial is underway and most citizens are practicing social distancing – efforts which will undoubtedly have a positive impact on the public health.
-Key Economic Notes-
The vast majority of economists throughout the world believe the economic recovery after COVID-19 is under control will be swift and severe. In addition, many businesses will benefit from the sudden shift in consumer behavior. South Korean Prime Minister for Economic Affairs Hong Nam-Kim forecasts the global economy will achieve a U-shaped recovery within the next two years. U.S. experts concur, predicting that many stocks in the e-commerce space will experience gains as a result of newly-formed shopping habits during voluntary social distancing. Specifically, online retailers operating in the medical, health & beauty, grocery, home, and entertainment spaces will see an increase in sales volume as more consumers begin to favor home delivery over venturing out to purchase from traditional brick-and-mortar businesses. Strategic e-commerce businesses will not only survive, they will prosper.
It’s important to note that, while U.S. publicly-traded equities have experienced a sharp decline, the Federal Reserve has responded with unprecedented and overwhelming measures to ensure that the banking system and the economy at large has all of the liquidity it needs. In addition, the U.S. Federal government has passed two smaller fiscal stimulus packages and is on the eve of passing a new bill that will provide over $2 Trillion of direct stimulus to help business and workers most affected by the virus and the required response to contain it.
Our firm is closely monitoring the situation as it develops, and we will continue to publish updates to keep you prepared and informed. Global Wired Advisors is here to help in these uncertain times. Please do not hesitate to contact us should you have any questions or concerns about the state of the economy or your business in particular.