Wynne Beckmann has worked in retail for 13 years, through the upheaval of the Great Recession a decade ago. But getting furloughed from her job at a Westchester, New York, mall in March felt different.
“This is an eye-opener. I don’t know how much longer I can do retail,” says Beckmann, a 32-year-old assistant manager at LOFT, a women’s clothing store. “If things don’t change, I’ll have to take my marketing degree somewhere else. Maybe Amazon or Glossier, somewhere that puts e-commerce first.” Long after the public health threat posed by the COVID-19 pandemic eases, the crisis could spur lasting changes in how Americans work, spend, save and invest, experts say.
Many like Beckmann are grappling with a future that may mean fewer jobs at stores and restaurants and more technology positions.
It’s a future where a generation of shaken young Americans may pull back on spending and older workers put off retirement to replenish depleted nest eggs.
“I think this is a life changing event,” says Mark Zandi, chief economist of Moody’s Analytics. “People are shell shocked.” In March, most states issued stay-at-home orders and shut down nonessential businesses to curb the spread of the virus, largely shuttering restaurants, malls, theaters and factories.
The ripple effects resulted in a record 20.5 million layoffs in April and a 14.7% unemployment rate, highest since the Great Depression.
As many as 10 million more job cuts are expected in May, pushing unemployment to about 20%, before the economy could begin to recover as early as June.
But the rebound is likely to be halting. Many Americans remain fearful of contracting the virus until a vaccine is widely available, possibly by the second half of next year. They’re expected to return to restaurants and other gathering spots warily.
The crisis could leave enduring damage. Although about 90% of unemployed workers in April said they were on temporary layoff, some economists worry that many won’t be called back.
American households have significantly cut their spending and increased their savings during the crisis. They socked away 13% of their income in March, up from 8% in February and highest since 1981, government figures show. In April, sales fell 79% at clothing stores, 61% at electronics and appliance stores, and 59% at furniture outlets.
Much of the drop-off isn’t surprising considering most restaurants and stores were closed. But with 39 million Americans laid off, furloughed or forced to work fewer hours, 30% of adults have seen their household income fall, according to a recent Bank rate survey.
Despite squirreling away more of their income, nearly one in five adults have less in emergency savings than before the pandemic.
Michelle Liu, a sales associate at Dillard’s department store in Charlotte, North Carolina, saw her hours cut in mid-March when the pandemic hit.
Then the 36-year-old, who works at the South Park shopping mall, was furloughed within a matter of weeks.
Liu, who had been stashing money away for school and dental work, struggled to receive unemployment checks for over a month and was forced to pull from her savings to help pay insurance premiums, along with groceries and car repairs for her father.
“It’s been hard. My savings have completely dropped,” Liu says. “Now I have to start from scratch.” Liu, who was initially furloughed until at least July, has now been asked to return to work. But she’s anxious.
The financial blow from job losses like Liu’s could spawn a more cautious mindset, especially for college grads as well as millennia’s whose careers were detoured when they entered the workforce during the Great Recession and now face another setback.
“Saving and risk-taking will probably change for a whole generation,” says Andrew Chamberlain, chief economist of Glass door, the job posting site.
Both restaurants and theaters could see fewer patrons because of less demand and more spacing requirements between tables or seats.
Kuznetsova expects growth in dine-in movie theaters, perhaps with some restaurants and theaters merging. That will mean fewer jobs over the long term. At the same time, she foresees a possible renaissance in drive-in movie theaters, providing new jobs.
Zandi expects retailers to install ordering kiosks and other automated systems to increase productivity and better withstand another downturn, a strategy that would further reduce jobs.
The move to online banking during the shutdown is also likely to endure to some extent, requiring fewer employees at branches, a McKinsey study says.
Many workers’ retirement savings plans have taken a hit. The Standard & Poor’s 500 index is 15% below its Feb. 19 peak. In late March, 63% of workers were confident about having enough money to live comfortably in retirement, down from 69% in January, according to a survey by the Employee Benefit Research Institute.
Among those laid off or furloughed – or who expected to be in the next six months – just 47% said they were confident in their retirement finances.
Reporter Dalvin Brown contributed to this story.