A recent Bankrate survey found elevated concern about Americans’ ability to pay their bills, the security of their jobs, and the value of their investments. 3.8 million Americans filed new claims for unemployment benefits last week and the total number of new claims is 30 million since the pandemic began and the economic slowdown shuttered businesses from coast to coast. To talk about the survey, Newell invited Bankrate Senior Analyst Mark Hamrick onto the program Monday morning.
“Mark I know you’ve got to be busy because the financial data is coming from every direction, all day, every day, and never seems to stop,” Newell began. “I don't know about you, but I am getting just a little bit weary.”“That’s the global condition right now,” Hamrick said. “We have to work to find the rays of good news here, and to be sure, there are glimmers of hope on the vaccine and treatment fronts, but on the economy, there’s not much to be found. We are setting up a course for the April unemployment report due this Friday, and that is probably going to be a new low-water mark with respect to grim economic data.”“When we think about those numbers - 3.8 million new claims last week, 30 million overall - we know the next report is going to grow those even more, what does that tell us? Newell asked.“It tells us that things are as grim as we think they are, and at some point, the data catches up with the reality on the ground,” came the answer. “This is a situation where there is a high degree of uncertainty about the future, because as we have seen with all kinds of anecdotal evidence in recent weeks, while some political leaders may be eager to give the green light and allow the public back to some semblance of normalcy, many consumers are reticent to do that. Consistent with their reticence is a lack of any further economic activity.”
“What do you think are the top five industries that will have the hardest time coming back?”“Leisure and hospitality led us off in the crisis and they will also be the slowest to return, at least in terms of getting back to where they were before. In the past, many Americans were willing to spend money that they essentially did not have to go to Disneyworld, etc - I think many will be fearful of going into those kinds of environments before there is a vaccine. Disney is trying to make the best decisions with respect to the safety of their customers, but it’s a tough call. They have to worry about their workers too. Their business model is all about crowding people into a space. So that bleeds over to the airlines, and that’s why Warren Buffet said it’s not time to invest there, in his view.”
“Leisure and hospitality are at the top, but retail is certainly right behind,” Hamrick continued. “J. Crew is filing for bankruptcy protection, and there will be others to follow of course. It’s also important to remember that there is a pain in the ‘Mom and Pops’ as well as the national chains. That pain is here. Obviously, online is taking market share and a lot of that is going to stick, and it will remain to be seen who survives. That’s another difficult call.”“Is this the nail in the coffin for big malls?” Newell asked.
“I don’t think so,” Hamrick said. “I’ve been in this business a long time, and in 1984 I did a feature about how technology afforded us the opportunity to remain holed up in our homes… I spoke to a brilliant thinker who reminded me that even when we have the ability to watch movies at home (on VHS back then), there’s still a social component to the human brain. And whether its an enclosed mall environment or not, there’s still going to be that component. This is part of grieving through this process, this sort of loss of the human life that we are all feeling. We are all missing the experience of being in a restaurant and we mourn the opportunity to go meander around stores, even if we don't buy anything, we still like to look. That part of human behavior will remain intact. Perhaps the look of malls will change, many restaurants will go out of business permanently in the near term, but we will still all want to dine and go back out, particularly when we have a vaccine and we have the knowledge that it's safe to do so.”