With their businesses shuttered for weeks, millions of Americans now without jobs, and budgets being scrupulously tightened in every household, every eyecare professional undoubtedly has the state of the economy on their mind.
Additionally, consumer confidence has plunged to an all-time low—down by 18.5 points since March 15, the largest four-week drop in the Bloomberg Consumer Comfort Index’s (CCI) 34 years of weekly polls.
To get an expert view of where the economy is headed—both in general and for eye care specifically—EB Editor-in-Chief Erinn Morgan checked in with Brian Beaulieu, CEO and chief economist at ITR Economics, the oldest privately held, continuously operating economic intelligence firm in the U.S. Beaulieu speaks annually on the economy as it relates to eye care at The Vision Council Executive Summit, and he also pens an economic outlook feature every November for EB’s readers.
“One of the points I made in January and I’ve made at prior Executive Summit meetings is that our industry tends to be relatively recession-proof compared to so many others,” he says. “It’s one of those wonderful industries that normally can ride these things out, but between this being a close-contact disease and the government’s responding by shuttering businesses, we really have a double black swan [with Covid-19].”
Here, we catch up with Beaulieu for a closer look at the state of the economy—and how ECPs can prepare for what lies ahead.
EB: What is the current state of the U.S. and global economies?
BRIAN BEAULIEU: We’re looking at a deep recession in progress, both here in the United States and it’s worse in Europe and will remain worse in Europe.
All of our analyses of the Covid-19 trends—seeing how it’s played out in Asia, looking at those trends every single day—we’re seeing we’re on target for this thing to be abating in May or June. That means we’re still on target for third quarter of this year for people to start getting back on their feet. They’re going to start getting back to some sort of normal behavior.
The speed at which the fiscal policy stimulus and the monetary stimulus have come to be is so much better than we saw in 2008, 2009. And that’s what allows us to think that this timeline [is feasible]—that we will have rounded the bend and we’re beginning to rise as early as Q3 2020.
EB: What is the economy going to look like in 2021, and when will we see recovery?
BB: Continued recovery and gains. In our forecast, by probably not ’21 but on into ’22 when the rising trend continues, we will have completely recovered—in other words, gotten back to where the economy started from before this Covid-19 black swan came across and broadsided us. Late ’21, early ’22, we will have gotten back to where we started from.
EB: What are the best steps that independent eye-care professionals can take for survival in this critical moment?
BB: Step One: If you don’t already have the ability, quickly learn how to do a very good cash flow analysis and cash flow projection on your business. Find out how much cash you have and how long you can make it last. You have to know those things.
Step Two: Apply for the PPP, the CARES Act, for your payroll to cover your employees. This is the government offering to give you a huge bailout as long as you keep your people employed.
Step Three: The other thing is to start figuring out how to reassure customers that it’s safe to come back in. They’re going to have the need. Some of them will have learned to do this on an e-platform, but I’m not convinced that that’s going to be a big, significant shift out of this.
So, convince them with marketing and promotion that there are these precautions in place and it’s going to be safe. Each independent eyecare provider—they’re the trusted adviser that cares about [customers] and their total health.
EB: A full 85% of ECPs tell us they expect a “significant” financial impact to their business. What can they expect in 2020 and into 2021?
BB: Particularly when we get back into going-into-school mode, you’re back in business and you’re repairing your income statement at that time.
That’s still going to constitute a significant hit, obviously.
But, if you are watching your expenses very carefully right now, then what it’s going to be is a hit to your profitability rather than digging yourself out of a very deep hole.
EB: Do you think consumer confidence will continue to rise and grow?
BB: I think so. A lot of the consumer confidence will get its lead from the stock market. In our analysis of the stock market—the numbers are 72.3% probability that April will have seen the low in the stock market and that it’s not going to be a nice, smooth, rocket ride up, but the decline is behind us.
If you can get days and then weeks knitted together where we’re not seeing those catastrophic declines, people start feeling more confident.
EB: With a dip in eyewear product purchases, what do you project for frame and lens makers to contact lens product sellers?
BB: I think it’s normal to see a lag behind the recovery in that inventories are going to have to be worked on. I’m sure inventories piled up really quickly because this hit so rapidly. The best way to get around that, I suppose, is having the next “must-have,” [which] can help circumvent all that.
To watch the full interview with economist Brian Beaulieu, part of EB’s Covid-19 Strategies Series, head to facebook.com/pg/eyecarebusiness/videos/ .
ABOUT BRIAN BEAULIEU
Beaulieu has been an economist with ITR Economics since 1982 and its CEO since 1987. Previously, he was an economist for the U.S. Department of Labor. Beaulieu speaks annually on eye care + the economy at The Vision Council Executive Summit.