Consumer behavior key to getting economy back on track

Posted on Dec 21, 2020 :: Insight on Business, Web Exclusive
Posted by of Insight Publications

As 2020 comes to an end, a lot of questions remain about the region and state’s economic future. A panel of experts during a recent webcast on the subject by the University of Wisconsin-Oshkosh shared businesses are still struggling and will continue to do so until consumers are comfortable to return to their pre-pandemic behavior.

Since April, the UW-Oshkosh’s Center for Customized Research and Services has surveyed monthly businesses from across the state on how they are doing and what they’re expecting in the near future. Putting those numbers together, business leaders, educators and economic development leaders can have a better understanding of how businesses are doing and their largest concerns, said the center’s interim director Jeffrey Sachse.

“Looking back at the UW-Oshkosh COVID-19 surveys since April, one thing is clear: businesses are doing more with less,” he said. “Businesses are also waiting to see if consumers continue to hibernate into early 2021. Many consumers are staying away, especially in the hospitality industry, and will likely continue to do so until they don’t feel so worried about going out in public.”

The monthly COVID-19 survey is a partnership between UW-Oshkosh, the Wisconsin Economic Development Corp. and the state’s nine regional economic development organizations. Sachse said the survey will go on as long as businesses feel the pandemic’s impact.

Looking at the past nine months, Sachse identified 83 businesses who originally participated in the survey have closed and that businesses’ supply chains have been interrupted.

“I think we’ll see some sluggish activity into the first quarter of 2021 and maybe some of the second quarter,” he says. “Businesses are looking for grants and low-interest loans as well as renewed access to their customers.”

Dan Brosman, director of the Alta Resources Center for Entrepreneurship and Innovation at UW-Oshkosh, said businesses are looking for alternative ways to connect with their customers with many developing e-commerce options as well as delivery or curbside pickup. “Many of these businesses plan to keep these new add-ons even once we get through the pandemic,” he said.

Looking at economic data, the pandemic decreased the number of potential jobs by 9.7 million — looking at where jobs are now versus where they would have been if the pandemic hadn’t happened, said David Fuller, an associate professor in economics at the university. In addition, he pointed out that with higher unemployment numbers, it’s possible payroll taxes may need to be raised, which would provide another blow to businesses.

“We are seeing the unemployment level going down, but that may be caused by people who have decided to give up looking for work because they can’t find anything. Also, more women who lost their jobs are staying home to keep watch over their children attending virtual school,” Fuller said.

Chad Cotti, UW-Oshkosh’s chair of economics, said the consensus is that consumers won’t go back to their pre-pandemic behaviors until community spread decreases.

“We can’t expect the economy to approach what was normal before last March until community spread stops or decreases dramatically,” he said, adding he thinks getting to a level of 70 to 80 percent of the population being immunized is ideal for people to resume their pre-pandemic behaviors. “Consumers won’t head back to places if they’re worried about getting sick.”