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The key to tracking the economic recovery post-COVID is the return to consumer demand. And we can measure this with retail sales.
One of the concerns about a potential “second dip” in the markets is if demand doesn’t return fast enough for companies to regain profitability.
Retail sales would have to return to near their pre-COVID levels in order to be able to say that a recovery has been achieved.
Following the experience in China, there is a hypothesis that with stores reopening, there should be a significant “bump” in consumer buying due to pent up demand.
Statistics tracked by The Economist show that consumers are using COVID as an opportunity to save at unprecedented levels. In fact, average savings are increasing even as people lose income.
If this trend continues even after the lockdowns cease, we could have lower consumerism going forward. And this could significantly impact economic growth.
Also, without an increase in retail sales, it’s les...
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