Feature Stories | Nov 16 2020
Eight months down the track we have a second wave, a vaccine hopeful, changing attitudes in society and massive fiscal support, which may lead to the “zombification” of economies.
-Business confidence on the wane again
-V-shaped recovery at risk
-Shifting electoral attitudes
-Propping up the otherwise dead
By Greg Peel
News of a vaccine candidate proving 90% effective has spun world markets on their heads. Yet it had been predicted earlier in the year, at least by many, that we would have a vaccine by the end of this year, if not earlier.
Arguably, global markets, particularly in the US, had already to some extent priced in this assumption. But while faith was not lost, along came the global second wave.
Prior to the second wave ultimately proving worse than the first, economies around the globe had experienced a notable V-shaped (if not Nike swoosh-shaped) economic recovery in the September quarter, and assumptions remained positive for the December quarter, if not quite so dramatic. But the second wave has killed off that sentiment.
In the US, it had been hoped that before the initial round of government fiscal stimulus expired, a second round would be agreed upon by Congress. It wasn’t. Then as the second wave took hold across the country it was assumed Congress will agree on a package for the simple reason that it must.
Not to be. Indeed, still not to be, and unlikely before Biden’s inauguration and, if the Republicans retain the Senate, a stalemate may yet drag on. But…and it’s a big but…if there’s a vaccine, will a second package be needed?
One might argue no, but by that time more small businesses will have gone under, more tenants will have been evicted, more home owners will have been foreclosed upon, and unemployment will likely start rising again. And it still may be months before a vaccine can be widely distributed.
If markets do look ahead to successful widespread distribution, will they price in “back to normal”? Back to a pre-covid world?
No, is the consensus -- a post-covid world will look different to a pre-covid world, and we still have to get there.
FNArena first examined what a post-covid world might look like in a three part series Life After Covid, published in June-July (links below). At that stage predictions were heavily speculative.
Last month FNArena published Australian Retail: Whereto From Here (link below), which drew upon the actual trends evident in the ensuing period underpinning or dismissing, at least in the retail sector, earlier speculation.
This series picks up where the first three parts left off, looking at the wider picture, eight months along from the initial March lockdowns, drawing upon research and analysis informed again by noted trends in the period. What will a post-covid world look like? And what is yet to transpire, as the second wave grows ever more virulent, before we even get there?
Note that research drawn upon for this article was published both before Pfizer’s vaccine announcement and before the US presidential election was run and, it appears, won, but with a vaccine still anticipated sooner rather than later and a Biden victory at that stage looking the most likely.