Empty streets, eerily quiet malls, dark storefronts and only a few people willing to take the risk to venture outside. Cities are being described as ghost towns.
That is the scene playing out globally — in parts of China, Japan, Singapore and Italy, among other regions — as the deadly coronavirus keeps spreading. More than 81,400 cases have so far been confirmed.
And while this isn’t the picture in the U.S. yet, roughly $2 trillion has been wiped from the stock market in a matter of days. The Dow hasn’t fallen so much in a week since 2008. Many retail stocks, such as Macy’s, Under Armour and Gap, are taking a beating on fears that consumer spending could slow. A grouping of airline stocks, the NYSE Arca Airline Index, is on pace for its worst week since 2009.
The stock market correction shows the virus doesn’t need to be rampant in the U.S. to start wearing down consumers’ psyches. Fear can begin changing spending patterns. And a widespread outbreak would have more dire consequences, disrupting consumer behavior more profoundly. Remember, consumer spending makes up about 70% of the U.S. economy.
Altered shopping habits
Retail analysts already are forecasting for companies, and customers, to take some sort of a hit in the U.S.
If the COVID-19 virus is “substantially contained” by April, CGP expects retail sales in the U.S. will grow 4.1% in 2020.
Meantime, a leading trade group on Wednesday said its more upbeat forecast for 2020 retail sales does not assume a pandemic occurs. But the National Retail Federation said the situation remains “liquid,” and its forecast for growth of 3.5% to 4.1% could take a hit if consumer spending was to slow.
Other retailers could be bracing for a bump in their online businesses, if more Americans end up holed at home, either in fear of going out or in some sort of quarantine situation.
“Consumers in the U.S. are going to respond as soon as we see this is more widespread,” said Greg Petro, CEO of First Insight. “If it isn’t sorted out [soon], it could affect the holiday season, which would cripple some companies.”