COVID-19: Initial recovery trends reflect rising consumer spending

In the last two weeks of April and early May, consumer spending recovered a little each week in anticipation of a move into a ‘normalisation’ phase, as countries lift lockdowns and begin to show signs of economic recovery. Spend that was at first focused on essentials, such as groceries, is now being extended to home improvements and clothing, but not yet on entertainment.

These are among the findings of a World Economic Forum report published this week on the wake of the COVID-10 global pandemic, which draws particular attention to shifting consumer behaviour and the toll on young people's prospects, among other developments.

John Scott, head of sustainability risk at Zurich Insurance, a WEF partner, said: “Increasing inequality, dramatically shifting consumer behaviours and a lockdown that is having a significant toll on young people’s prospects, mental health and well-being are highly interdependent issues which impact the global economy, geopolitics and our societies in equal measure.

“On top of this, we are already seeing record levels of unemployment due to lockdown measures and are having to re-learn hard lessons – in particular that social deprivation determines health outcomes.”

Our way of life, he adds, will be changed forever, both at work and at home, with the social dimensions of the crisis, including generational frictions and continued stress on people’s well-being.

There is some cause for optimism, however. "We need to focus not only on a healthcare solution, but a recovery that is focused on climate, sustainability, and on societal risks, such as inequality, mental health, the lack of societal cohesion and inclusion. If we do not do this, then the gaps in inequality – especially financial – are likely to remain and increase,” Scott added.


After COVID: Developments and lessons (Source: WEF & Zurich Insurance Covid-19 Risk Report)

Employment

· HR departments have rarely been more important. Working remotely increases the risk of isolation, alcohol dependency, excess smoking and bad backs through poor ergonomic posture.

· The state was previously seen as the ultimate safety net but employers have had to accept that they too have to protect their workers in order to survive and thrive.

· Getting back to a pre-Covid-19 growth phase is likely to be a long and difficult task and businesses will likely use fewer employees in the future. The challenge to return to normal is, therefore, as much a psychological as economic choice.

Inequality

· This economic crisis has already hit those in more socially disadvantaged groups disproportionately harder.

· Some are having to face the moral dilemma of choosing between working to generate income or staying at home to protect their family’s health.

· Therefore, continued exposure to health risks faced by essential workers, who are often among the lowest paid, raises the concern of heightened death rates amongst people in these roles – highlighting significant societal, income and health inequalities.

Future generations

· The mental health and well-being of young people is suffering – as are their long-term prospects

· Youth employment in developed economies had only just returned to pre-2008 financial crisis levels. And in developing economies, youth unemployment has risen steadily, creating a real risk of social unrest.

· Currently 80% of the world’s students – more than 1.6 billion young people - are not attending school and many students in poorer communities lack the necessary tools to access online courses or are unable to easily work at home.

Consumer behaviour

· Consumer behaviours are already changing, even during the stabilisation phase, which most economies are in right now. In March, global consumer spending was lower with every passing week.

· In the last two weeks of April and early May, however, consumer spending recovered a little each week in anticipation of a move into a ‘normalisation’ phase – where economies reduce lockdown measures and show signs of economic recovery.

· At first, expenditure was on basics, such as groceries, but now spending is more focused on home improvements and clothing. There is not yet any significant expenditure on entertainment.

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