The end of the pandemic is likely in sight. All that stands between the current recession and a new normal is the slow business of vaccine distribution.
However, when that recovery comes — and what our new world will look like — isn’t set in stone. Experts still don’t agree on when the pandemic will end and economic recovery will begin. While most estimates fall within a certain timeframe, there’s still some uncertainty.
Here are the current estimates on when recovery will likely begin post-pandemic.
Recovery Could Come as Soon as April
Businesses that want to see growth will likely have to wait until the economy reaches pre-pandemic levels. This kind of recovery will probably only begin once the pandemic is mostly over. Things should improve when unemployment levels fall, consumer confidence rises and it’s mostly safe to eat out or shop in public.
In turn, the pandemic is likely to end only once enough people have been vaccinated, preventing the virus from spreading as effectively as it has.
Estimates from leading economists and health experts on when the crisis will end and recovery will begin vary. Some of the most optimistic are expecting recovery in the U.S. to start as early as the second quarter.
According to analysis from J.P. Morgan, the pandemic could be effectively over by April — so long as vaccine distribution programs continue to accelerate at a reasonable pace. Marco Kolonavic, J.P. Morgan’s global head of quantitative and derivatives strategy, wrote in mid-February that with current vaccination growth, we might have just 40 to 70 days left of the pandemic.
This would mean the spread of COVID-19 would effectively begin to wind down in April. Recovery could start soon after.
Others are more cautious. Dr. Anthony Fauci, the nation’s top infectious disease expert, believes herd immunity won’t come until fall at the earliest. In this case, economic recovery may not start in earnest until Q4.
It’s also important to remember what we’re recovering from. In 2020, the employment rate in the U.S. hit its lowest levels in more than two decades.
While the numbers don’t look as bad in 2021, recovering from this amount of economic damage is likely to take time.
For businesses, this uncertainty likely means that reopening or investing heavily in new products too early could be risky if the recovery doesn’t come right away.
What Will Recovery Mean?
Recovery probably won’t mean a return to normal or the pre-pandemic way of doing things. This is because consumer behaviors picked up during a recession tend to stick around.
During the 2008 financial crisis, many people switched from name-brand grocery items to generics. The habit stuck around even for households whose earnings returned to previous levels. According to data from Deloitte, while consumers weren’t always happy about the switch, few planned to go back to name-brands as of 2013, well into the post-2008 recovery.
This is likely because many consumers ended up trying goods they wouldn’t have otherwise given a chance.
The COVID-19 pandemic has caused some major shifts in consumer behavior in almost every aspect of daily life. People are eating out less, working remotely, using telemedicine to see their doctors, and opting for delivery of everything from groceries to medications to household staples.
Many economists and business leaders believe these changes will have a big impact on post-COVID life. Wendy Liebmann, CEO and chief shopper at WSL Strategic Retail, predicted last April that “three-quarters of consumers will continue to shop for groceries, health and beauty products (online) in the future,” even once the pandemic is over.
Similarly, health care experts are planning for telemedicine to be a regular fixture of future care.
For businesses, this means that some adaptation to current spending patterns will likely pay off down the line. Even if consumers don’t shop online as much as they have in the past, online shopping will likely continue to be more dominant than it was pre-COVID.
The same may go for takeout, medication delivery and remote services. Finding ways to serve customers according to their new demands may be essential to future business success. Many marketers are looking to improve their business’s use of online channels and boost online customer experience in response to these changes.
Taking advantage of online customer service strategies like digital personalization and social media marketing may help a business do well — both now and once recovery begins.
What Recovery May Look Like
The actual recovery could take many different shapes. In the early days of COVID-19, as consumer demand initially fell, economists were hopeful that lockdowns and similar public health measures would bring a swift end to the pandemic. After that, they forecasted, we could see a “V-shaped recovery” — one where demand and growth would pick up just as fast as it fell.
Now, more than a year after the pandemic first began, economists are somewhat more cautious.
Rather than a speedy, V-shaped recovery, more economists predict a gradual one — like a U-shaped recovery, where demand slopes back up to normal over the course of months. Some also predict a W-shaped recovery, where a second recession interrupts things briefly before economic activity can rise to its new normal.
Others, however, are even less optimistic. Analysts at J.P. Morgan have opted to introduce a new shape — the K-shaped recovery — to describe their forecast. If their predictions are correct, some businesses are likely to recover much faster than others.
Large-cap firms — those with market capitalizations over $10 billion — and tech companies are likely to have a more-or-less quick bounceback. Smaller and cyclical businesses that sell more when the economy is doing well will have a noticeably slower recovery. The same will likely go for workers employed at those companies.
As a result, small businesses may need to prepare for low growth even after recovery appears to have started for larger companies.
Possible Barriers to Recovery and Growth
While economists are optimistic about potential recovery and growth in mid-to-late 2021, there are some reasons to remain cautious.
Vaccine distribution remains slow and somewhat chaotic. While some states are on schedule, others are still struggling to get doses to frontline workers and those at high risk.
Fortunately, there are signs that federal action may help accelerate vaccine distribution — meaning we may not have to worry about serious issues with the process.
At the same time, several new strains of the SARS-CoV-2 virus have emerged in the U.K., Brazil and South Africa. Some early research suggests that vaccines may be less effective against these variants.
Current vaccines will still work against these strains — but their effectiveness may be diminished, according to Dr. Fauci. This could make achieving herd immunity through vaccination more difficult, potentially slowing down recovery or hampering it once it begins.
How Businesses Can Prepare for the Post-COVID Recovery
The end of the pandemic and recovery is coming — even if economists aren’t exactly sure when it will happen.
Businesses that are preparing for the new normal can employ a few strategies that can help them stay afloat and make the most of the early recovery. For example, it may be a good idea to treat some changing consumer preferences as a preview of the new normal.
After COVID, it may still be normal to order grocery delivery, shop online or use telehealth services, even if in-person options are safe and available. New patterns of consumer demand may stick around, and ad channels that have become more valuable over the past year — like most types of online marketing — may become even more important.
Once the recovery arrives, it may be slow. Businesses may want to hold off on major spending until it’s deemed safe to make such investments.
About the Author: Eleanor Hecks is editor-in-chief at Designerly Magazine. She was the creative director at a digital marketing agency before becoming a full-time freelance designer. Eleanor lives in Philadelphia with her husband and pup, Bear.