American fears of recession are rising rapidly. When BCG surveyed a cross section of the public March 6-9, only 56% expected coronavirus would lead to a recession. When the survey went back into the field March 13-16, that had risen to 72%. And today? “You have to assume much higher,” says CEO Rich Lesser. U.S. sentiment seems to be running just a week or two behind European sentiment, where 91% of Italians now expect recession.
So how will their spending habits change? Not surprisingly, the BCG study found most people plan to spend substantially less on travel and restaurants. But it also found many expect to spend less on clothing, luxury and household appliances. Areas for more spending: organic food, vitamins and supplements, household care products, packaged food and beverage, and cigarettes.
Lesser believes the big issue for the coming weeks is this: If social distancing succeeds in tamping down the spread of the virus, then what? “We can’t live in this mode forever.” If a vaccine is more than a year away, how do we keep the virus at bay and get the economy going at the same time? “We are going to have to think about how to restart,” he says. “What are the tradeoffs between lives and livelihoods? What are businesses doing to be ready to restart?”
You can read Lesser’s thoughts on the subject on Fortune.com, here. It will soon be a topic every business has to wrestle with.
Markets continued their downward dive on Monday, driven in large part by a Goldman Sachs study showing earnings per share will fall 33% this year. Amazon, faced with a surge of orders, is deprioritizing certain shipments in order to ensure timely delivery of medical supplies and household staples. The company has said it is hiring 100,000 people to work in its distribution facilities and help meet the demand.
Separately, for a case study in how CEOs should communicate in the most dire circumstances, be sure to watch Marriott CEO Arne Sorenson’s message to his employees last week, when announcing the furlough of tens of thousands of employees. Candor, sincerity and empathy go a long way.