Quick Thoughts: Focus on Consumers

The path and severity of the COVID-19 pandemic and the economic consequences are still unknowns. Fiscal stimulus has not been fully implemented, and we have not reached the peak impacts of business slowdowns.

Against this backdrop, I wanted to share some thoughts on how the work-from-home (WFH) response to the pandemic could continue to affect different groups, particularly US workers, global oil producers and small businesses.

Most people cannot WFH. According to the US Bureau of Labor Statistics, only 29% of Americans can work from home, including only one in 20 service workers.

o The US weekly jobless claims are an important economic gauge of the degree of the coronavirus shock to the economy. The large unemployment claims reported this week are historically large and likely to continue.

o As economic pain spreads from workers to property owners, mortgage lenders and other groups, we expect some negative news about just how severe the “missed payments” phenomenon is—especially when, depending on the study cited, somewhere around 75% of US employees live paycheck to paycheck.

o While the United States uses unemployment insurance to support workers, many European countries have paid companies to retain workers. As a result, US unemployment will likely rise faster than Europe, but also likely drop faster as the US economy recovers.