Emerging Revenge Economy Gets a Boost from Vaccine Rollout
Abby Long is the Senior Managing Editor at PMG.
Forecasts and news reporting on the post-pandemic future are following two distinct narratives, the first recognizing the financial and societal repercussions caused by one of the worst economic crises in modern history, with special attention paid to the pandemic’s impact on women, people of color, and low-income families. The second acknowledges pent-up demand and how excess savings, consumer confidence, and other indicators are establishing a substantial foundation for economic recovery in the months and years to come.
As a result of expansive vaccine rollouts and the $1.9 trillion stimulus package, the Organization for Economic Cooperation and Development (OECD) predicts “much higher growth for the global economy in 2021.” The agency shared that the U.S. economy would grow by 6.5 percent this year, more than doubling its previous forecast of 3.2 percent in December 2020.
With the world economy showing promising signs of stabilization, and even growth in some sectors, everyday life for many Americans is starting to offer flashes of normalcy, begging the question: Are we merely months away from a return to normal?
As people traded in slacks for sweatpants and travel itineraries for TV screens throughout 2020, non-spending hit a record high, and Americans have stashed away more than $1.5 trillion in excess savings as a result. Even corporate brands engaged in record non-spending, with CNBC reporting last October that Amazon had saved nearly $1 billion in travel expenses due to the pandemic, and others pulling back substantially on real estate and operational costs.
But now, thanks to warmer weather and promising progress in vaccine efficacy and eligibility, people are planning the return to some pre-COVID habits and lifestyles with a vengeance.
Analysts at Global Web Index, Morning Consult, and Forrester, among others, all report that the difficult circumstances of the past year have prompted a ‘revenge’ mindset for many Americans (and likely all or most consumers around the world) to make up for lost time, an inclination that will translate into a post-pandemic spending surge, effectively capitalizing on pent-up demand. Measuring the beginning (and eventual end) of this spending surge will be difficult, especially with stimulus payments and consumer comfort levels playing influential roles in consumer behavior and spending habits.
Earlier this month, Morning Consult took a closer look at how indicators, such as comfort and economic stability, play a role in forecasting demand across activities and sectors
Chart by Morning Consult
Though many sectors have other signals to rely on.
TSA records show that over one million travelers have passed through TSA checkpoints every day since mid-March, though the CDC continues to advise that travel should be avoided. Days ago, some cities in Florida entered a state of emergency after spring breakers flocked to the state, packing streets, restaurants, and beaches. Since then, Florida has documented a surge in COVID-19 cases, particularly among young Floridians.
American Airlines reported on Monday that bookings are nearly back to pre-pandemic levels, with demand strongest for domestic and short-haul international trips. As of last Friday, American’s seven-day moving average of net bookings (new trips minus cancellations) was about “90 percent of booking during the same period in 2019.” Separately, Bank of America shared that recovery in leisure travel is now in full swing despite parts of Europe imposing new restrictions and U.S. health agencies recommending people not to travel.
For travelers who haven’t packed their bags just yet, Morning Consult reports that “63 percent of U.S. adults said they’re excited about the opportunity to take a vacation once the pandemic is under control and the economy has fully reopened — including 57 percent of Gen Z adults, 65 percent of millennials, 61 percent of Gen Xers and 64 percent of baby boomers.” Though only 29 percent of the public reportedly feel comfortable flying on a plane. “Until comfort levels improve, it’s likely more Americans will continue to travel more via car, with more than double (62 percent) saying they’re comfortable taking a road trip right now, and a roughly similar figure (56 percent) reporting they’re excited about doing so.”
According to Forrester’s U.S. Retail Recovery Heat Map that calculates for retail sales, local economic benchmarks, and virus spread, in March, the “strongest retail economies [were] in Atlanta, Cincinnati, Indianapolis, and Kansas City.” The weakest estimated recoveries are New York and Los Angeles, America’s two largest metropolitan areas, though that’s likely to change in the second quarter of the year, with New York expanding vaccine eligibility to everyone over 16 by early April.
Related: Andreesen Horowitz unveiled its Marketplace 100, ranking the leading marketplaces and showcasing up-and-coming commerce startups.
Some PMG retail brands have seen online shopping behavior mimic back-to-school season, as well as a notable increase in shoppers visiting brick-and-mortar stores, particularly in areas that have reopened to full capacity and reduce COVID-19 protocols. There’s little to no doubt that these online shopping trends are being driven by warmer weather, encouraging vaccine news, and thousands of schools returning to in-person learning as soon as this spring.
To the delight of some historians, many are referring to this season as the “Roaring Twenties,” though it’s much too soon to tell if this decade will be similar to its centennial predecessor.
Elsewhere in the news, influential companies including Facebook, Microsoft, Salesforce, and Uber, piggybacked on all the promising vaccine updates and progress reports with news of their own, unveiling comprehensive timelines and plans for bringing employees back to the office. As more people shift from home to in-person, spending habits will continue to follow, aiding in the longer-term recovery of restaurants and essential services, retail and business travel alike.
Chart by The Information
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According to The Information, many companies have redesigned office spaces since the start of the pandemic, and some plan to initially bring workers back to the office on a voluntary basis. As of now, most companies aim to adopt hybrid policies that combine in-office work with remote work flexibility, a decision that will only add to the swelling revenge economy.
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