(CBSNewYork) — Much of the national economy is struggling. Many industries have essentially shut down, hopefully temporarily, as most of society walls itself off from the coronavirus. The economy shrank by approximately five percent in the first quarter, and the second quarter is expected to be worse. A recession — defined as two consecutive quarters of negative Growth Domestic Product growth — seems imminent.
Consumer spending, which accounts for over two-thirds of GDP, is unlikely to rebound soon. Around 29 million people lost their jobs in April, the job market’s worst month in history. The unemployment rate stands at 14.7 percent. Consumer confidence has dropped to a six-year low. Many Americans are having trouble making ends meet.READ MORE: COVID Vaccines: Marin County Set To Expand Eligibility; Seniors Say Finding Appointments Still A Challenge
But the current economic environment does offer some bright spots. Demand for a wide array of goods still exists. People still want to do many of the things they normally do, albeit within a limited budget and a confined space. As consumers re-balance their priorities to the new normal, certain companies, through foresight or luck, are well positioned to profit.
Giacomo Santangelo, who teaches economics at Fordham University and the Stillman School of Business at Seton Hall University, recently looked at where the economy is and where it could be going. As Santangelo put it, “there are certain things that people are always going to need. And I think that those things will never change. People are always going to need food, people are always going to need groceries.”
But in a pandemic, people would rather have those groceries come to them than go buy them in physical stores. It should be no surprise then that grocery delivery services are doing well. According to Santangelo, “if you’re getting things through Amazon Pantry, we would expect Amazon to be doing well. And that’s kind of funny because Amazon is up 25% from the beginning of the year… Walmart is up 7%.”
And they’re far from the only ones. Business is bustling across the various grocery delivery services, as evidenced by consumers’ ongoing struggle to secure a delivery time slot. Those who are lucky enough to place an order often find key items missing when those orders arrive. Boxed, a sort of wholesaler for millennials, has struggled to keep up with a spike in business, as supply chains bog down.
That delivery services are thriving is no great surprise. As Santengelo put it, “companies that realistically benefit from people being in their homes are going to benefit from people being in their homes.”
Netflix, which added almost 16 million subscribers in the first quarter, certainly falls into that category. With growth numbers more than double what it predicted January, its largest three-month jump in its streaming service’s 13 years, the company has proven itself a de facto essential service. The deep catalog that it has built up over that time should keep it afloat, even when subscriber growth tops out.
Another likely distraction for the cooped-up consumer is video games. So companies that facilitate this form of entertainment should thrive. “Companies that manufacture computers, laptop computers, gaming computers,” according to Santangelo. “Companies that make computer games.”READ MORE: Stunning Yellow Superbloom Pops Up In Half Moon Bay - 'It's Perfect'
And that extends in various directions. “An expectation is that Microsoft is going to benefit from this,” says Santangelo, “as one would imagine that gaming laptops and gaming computers are going to be utilizing Windows operating system. They’re going to have Nvidia video cards. They’re going to have AMD chips in them… Companies like Ubisoft, companies like Activision that make games like Madden and Assassin’s Creed.”
Puzzle makers are having a moment. Puzzle Warehouse, the country’s largest puzzle distributor, says its sales are up a staggering 2,000% year over year.
Wine stores, deemed an essential business in many parts of the country, have seen an uptick in business even as they’re forced to bar customers from their physical stores. Alcohol may not be a necessity, though it can be a welcome distraction in difficult times.
What sorts of companies prosper in the future will depend on the path of the virus and the reaction of the economy. How long will parts of the country remain at home? How will parts of the country that are starting to open back up fare? Will testing and a one-day vaccine allow a return to some semblance of normal?
“When will we go back to something close to what we had before,” asks Santangelo? “If that happens in July, then the economic effect of this will be different than if this goes on until November.”
Parents are already starting to wonder how the ongoing pandemic and closing down of much of the economy will affect summer camps for their kids. Some Girl Scout camps, for example, have already canceled summer programs. However, many other camps are biding their time in the hope that conditions improve enough open their doors. What happens — or doesn’t happen — will create opportunities for companies offering online programs. Anecdotal evidence already suggests above-ground swimming pools are a hot item and backyard trampolines are in short supply.
The passage of time and the spread of the virus will change conditions in the economy in other ways as well. The meat industry has become a source of COVID-19 hotspots in recent weeks. Thousands of workers at over 100 domestic meatpacking plants across multiple states have contracted the virus. Many plants had closed, but president Trump signed an executive order forcing them to reopen and others to remain open. How will consumers react to further outbreaks at meat-processing plants, and what opportunities will arise for companies?
Perhaps consumers will be driven toward healthier food and the companies that sell it. “The longer we stay at home, if some of the news reports about the food supply chain are to be believed, people might start eating healthier, if healthy food is available,” Santangelo speculates. “If red meat becomes less available, and vegetables and more green foods — better foods for you — if they remain available, I think people might start being healthier.”MORE NEWS: COVID: Santa Clara Supervisors Approve $5/Hour Grocery Worker Hazard Pay
In such a fluid situation, with so many unknowns and unanswered questions, making concrete predictions is, at best, another diversion. Uncertainty is still the only certainty at this point in the coronavirus pandemic. “It’s probably safer to talk about the US economy in 2023, than it is to talk about it in 2020 and 2021, because we don’t know any of those things.”