COVID-19 Impacts - United States
While there is limited information that provides insight into the recovery of the U.S. economy, specifically in the retail, travel, and financial industries, the team was able to provide insights into how the U.S. auto and tire segments of the retail industry have shown indications of recovery from the economic slowdown caused by the corona virus pandemic.
The Auto Sales Segment is Exhibiting Signs of Recovery
- An analysis by J.D. Power hinted that the U.S. auto sales segment is showing signs of recovering from the corona virus pandemic even though it remains significantly low.
- The report hinted that sales in April 2020 were about 50% lower than April 2019 even though the decline was not as bad as expected.
- Speaking to CNBC, Thomas King — president of the data and analytic at J.D. Power — said that "0% financing offers, big incentives from automakers and all states now allowing at least online vehicle sales all contributed to the rebounding sales, which are up 11 percentage points from the end of March."
- According to the report, 24 states, which constituted about 44% of retail sales in 2019, allowed dealership sales operations to remain functional while the other 26 states, which made up 56% of retail sales in 2019, allowed only remote sales following the pandemic.
- With states easing the stay-at-home restrictions, J.D. Power opines that May would be critical in terms of sales in the auto industry.
- Major manufactures such as Kia Motors and Mercedes-Benz announced that they would resume production in April, while Tesla and Honda Motor are expected to resume production in May.
The U.S. Tire Industry is Showing Small Signs of Recovery
- On May 1, 2020, Sumitomo Rubber North America (SRNA) — a U.S. tire manufacturer — hinted that "the tire industry and tire dealer businesses are set to see an uptick in business" with states in the U.S. gradually reopening nonessential businesses.
- Rick Brennan — vice president of strategic planning at SRNA — reported that compared to March 2020 when the tire replacement industry volumes for passenger tires witnessed a 19% decline, it went down 64% by April.
- Light truck tire replacement dropped by 55% in April from 12% in March, while for medium-duty trucks, tire replacement dropped by 1% in April but was 10% up in March.
- Brennan pointed out that the recovery of the tire industry is boosted by an uptick in miles driven with states relaxing the stay-at-home restrictions. He hinted that miles driven was down by 48% in April but was down by 41% toward the end of the month. He expects miles driven to continue to rise as states reopen businesses.
- Matt Leeper — director of sales at SRNA — added that "compared to two weeks ago, increases have been seen across the board thanks to government support and the relaxing of shelter-in-place orders."
- While the research team didn't find specific data to show the recovery of the travel industry, we found expert reports that predict that it could take "18 to 24 months before travel picks back up".
- For the financial industry, Charles Evans — president at Chicago Federal Reserve Bank — pined that a return to economic growth should be expected from the second half of the year. "Some businesses will be able to ramp up even with social distancing and other precautions in place, Evans said, while others, including travel and hospitality services, will not. A lot will depend on how safe consumers feel to be out spending."
To provide examples that can provide a measured outlook on the economy of the U.S. as it is beginning to recover from the corona virus, with a specific focus on the retail, travel, and financial industries, the research team conducted an exhaustive search through publications by consultancies and expert reports that are focused on the U.S. economy. We also scoured through media publications and industry reports for useful insights into measurable indications that the U.S. economy is gradually recovering from the pandemic but most public reports related to the general retail industry, as well as the travel and financial industries, are predictions on the recovery of these sectors but not actual data points on how they are currently recovering. However, in the course of this research, the team found useful insight, with data points, on how the auto and tire segments of the retail industry are exhibiting signs of recovery.