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What will be the Economic Impact of the COVID-19 Crisis?

On April 28th, McKinsey & Company's Global Managing Partner, Kevin Sneader appeared on CNBC to discuss how his firm is advising multiple governors on when and how to reopen their states. In his words, the decision hinges on one question: how do you

reconcile the saving of lives with the safeguarding of livelihood? 

There's no easy answer. And with 70% of the US workforce unable to do their jobs from home, states need to consider how to make sure there is enough PPE, testing and contact-tracing in place to be confident that once they reopen, they won't have to shut down again.

How This Could Unfold

A recent survey of over 2,000 global executives showed that many expect the recovery to look like one of the scenarios shaded in blue below (A1–A4) which lead to a V- or U-shaped recovery. In each of these, the COVID-19 spread is eventually controlled, and catastrophic structural economic damage is avoided. 

Almost one third of these leaders anticipate a muted world recovery where US GDP could drop 35-40% in Q2 of 2020 and won't return to pre-crisis levels until Q1 of 2023 (A1). A slightly more optimistic outlook was the second most anticipated scenario, reflecting

 virus containment by mid-Q2 of 2020 with an economic rebound following Q2 2020 (A3). [Source: McKinsey]

Which Sectors are being 

Hit the Hardest?

1.    Commercial Aerospace
      May take years to recover from production and              supply chain shortages
2.   Consumer Air & Travel

      Domestic recovery is likely to recover faster than            international travel

3.   Oil & Gas

     Oil price decline driven by short-term demand               impact and OPEC+ decision to increase supply

4.   Insurance Carriers

      Reduced interest rates and investment                          performance impacting returns

5.    Automotive 

      Trade tensions and declining sales amplified by              acute decline in global demand

The Ellen Krantz Team

REALTOR® Associates

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