Consumers Become Cautious as Virus Spreads

  • The COVID-19 pandemic has forced some states to impose strict stay-at-home orders that are adversely affecting many industries. This is leading the U.S. economy into a recession that will result in very sharp declines in GDP for H1 2020 and in job losses, particularly in the retail, food & beverage and transportation sectors.
  • Retail is one of the sectors hit hardest by COVID-19 as evident by the abrupt drop in March retail sales. Although, the cascading effect of shutdowns and store closures in the second half of March did not materially impact retail real estate fundamentals in Q1, fundamentals in Q2 are expected to weaken.
  • Assuming the coronavirus peaks this summer in the U.S., the federal government’s fiscal and monetary stimulus will begin to bear fruit. This will be paired with pent-up private demand that could help the U.S. economy return to growth by year-end and drive stronger than previously expected growth in 2021.