Southern Indiana Business July-August 2020 | Page 15

been declining ever since. Manufacturing, accommodation and food services, and health care have led the claims for unemployment, with construction and retail trade also showing elevated levels. Even though the official dates of the Greatest Recession will be shorter than the last Great Recession, we can still expect slower growth as we exit. It will take time for businesses to return to pre-pandemic levels, and unfortunately some businesses will simply not return. The biggest threat to the recovery, however, lies with the consumer. The consumer makes up the greatest share of GDP, a measure that counts the amount of spending in the economy. As consumers, we make up close to 70% of that number. Our haircuts, restaurant meals, trips to the mall, and the cars we buy all impact GDP. The Greatest Recession will ultimately affect consumer behavior and attitudes that will be as great as the Great Depression. People will become more frugal and careful with their household finances. They will still go out to eat for a nice meal and will still enjoy leisure. However, the frequency of this activity will decline, and household savings rates will skyrocket. Look for lower cost leisure activities such as walks and picnics in the park, jigsaw puzzles, and digital streaming. That means that business will also have to adapt. Business models will change. Small business will need to innovate and generate new and different revenue streams. Small businesses that do this will expand and capture more sales. You must have a clear understanding of the value you are adding, and why customers pay you. Sometimes that question is not entirely clear. Knowing value added in the supply chain is a key first step in innovating and emerging successfully from the brutal effects of this pandemic. Most importantly, customers will have to feel safe. Retail and service entities will be evaluated along the historical characteristics of quality service and price, but now commercial enterprises will have to provide a level of safety service that is unparalleled in U.S. history. We can expect customer reviews and social media chatter to now include their “safety experience,” which may include a report on the behavior of other customers as well as employees. Restaurants, for example, will now be evaluated on the cleanliness of the table, as well as what is being served on the table. — Uric Dufrene is the Sanders Chair in Business at Indiana University Southeast. He’s contributed economic analysis to several area publications including the News and Tribune and Southern Indiana Business Source. He can be reached at [email protected]. July / August 2020 15