Consumer sentiment in several key areas was tempered in July’s IBM Institute for Business Value’s ongoing survey compared to June’s results. The poll found consumers to “remain unsettled about the economy” while continuing to shun visits to public spaces, as well as returning to the workplace.
In a separate economic report from IHS Markit, a slow recovery is expected in the U.S., with certain regions faring better than others. The outlook is based on a resurgence of COVID-19 cases in the South and West earlier this month. And it’s the resurgence that has consumers wary about returning to work, taking public transportation and visiting sporting events.
In regard to work, authors of the IBM report said that once employees “can return to their offices, 84 percent of respondents indicated that they would still like to work remotely at least occasionally, up 3 percent from June.”
“A growing majority also said they want employers to take clear and active measures to protect them from exposure to the virus when they return to the workplace while providing flexibility to help ensure mental health and well-being,” the IBM report stated.
Other work-related findings include 63 percent of respondents saying there needs to be clear communication from their employers in regard to what is “being done to sanitize the workplace,” which compares to 54 percent in June. Fifty-eight percent of those polled said employers should have “social distancing protocols” in place at work, which compares to 49 percent in June. And regarding child care, 41 percent of consumers polled said they “feel strongly that their employer should provide special accommodations for individuals to address child-care needs,” which is up 6 percentage points from June’s survey.
The survey of over 7,000 U.S. consumers mirrors several polls in recent weeks that showed sentiment shifting as the coronavirus first subsided and then surged this past month. As such, consumer attitudes toward health (personal and public) showed significant changes in July’s IBM survey.
The report found that in July, 72 percent of those polled “report that COVID-19 has made them more concerned about the safety and health of themselves and their families,” which compares to 68 percent in June. “The same percentage of respondents also said they worry about a second wave of COVID-19 later in 2020,” which compares to 65 percent in June.
The poll also revealed that 66 percent of respondents expect to “see more global pandemic-like events in the future,” which compares to 60 percent in June. “Only 13 percent of consumers surveyed believe that the economy will bounce back to where it was prior to COVID-19, a three-percentage point drop from the previous month,” authors of the report stated.
Jesus Mantas, senior managing partner of IBM Services, said the results from “our ongoing survey underscore that consumer attitudes continue to shift as the effects of the virus fluctuate around the country, and consumers are preparing themselves for more permanent changes in behavior.”
“These new behaviors define the new preferences that business leaders need to be able to deliver to meet consumers where they are,” Mantas said. “This is no longer a question of competitive advantage, it’s a matter of business survival.”
In regard to visiting stores, 35 percent of those polled said they “don’t plan on going to shopping centers or malls this year,” which compares to 27 percent in June. And 66 percent of respondents said they “would not visit an amusement park (up from 59 percent in June), and 64 percent won’t attend a live sporting event this year (55 percent in June).”
Looking at transportation, 53 percent of consumers said they will use public transportation such as buses, subways or trains “less or no longer at all,” which compares to 55 percent in June, while “three out of 10 said they would exclusively use their personal vehicle (compared to 26 percent in June).” And in good news for carmakers, 70 percent of respondents who don’t own a vehicle said they would buy one, which is up 6 percentage points from June’s survey.
Despite the pandemic and recent social unrest, “more than half of those surveyed indicated they want to stay in an urban area, the same percentage as polled in June.”
“But for some, living in urban areas has become less desirable,” authors of the IBM report said, adding that about one in five urban consumers “indicate they plan to move or will consider moving to non-urban areas as a result of COVID-19, similar to June.”
Looking at the broader economy, the COVID-19 pandemic is in the driver’s seat and things may not go back to normal anytime soon. In the economic analysis report from IHS Markit, Karl Kuykendall, associate director of regional economics, said the firm’s expectation is for “a slow recovery with conditions starting to approach ‘normal’ after a vaccine is widely available, which we estimate to be in the latter part of 2021.”
“Until then, COVID-19 will be an ever-present weight on economic activity until caseloads can be reliably managed,” Kuykendall said.
By region, Kuykendall said the Northeast is likely to take the longest “to return to pre-pandemic employment levels, as the region is taking a measured reopening approach and its regional economy is more mature and historically slow-growing.”
He said the Northeast is also “the most densely populated region, which poses another challenge in this environment. While employment growth rates from the third quarter of 2020 and spanning into 2022 will look stronger in the Northeast, this stems from the fact that it is climbing back from a deeper fall.”
Meanwhile, the South has seen the “softest decline in employment and is on the fastest track to recoup those job losses, especially since it is typically among the top-performing regions.” But that outlook comes with a caveat. Kuykendall said this assumes that “caseloads do not continue to spiral out of control, with the South facing the most acute downside risks given the recent COVID-19 trends.”
“Going forward, the fact that California, Florida, and Texas have had to pause or roll back reopening plans will tap the brakes on their near-term employment recovery,” he added.