2020 CoronaCrisis Differs from 2008 ConfidenceCrisis

The sub-prime crisis was the catalyst for the broader crisis which followed.  It led to a breakdown of confidence in the banking system, and a subsequent lack of liquidity, with bank balance sheets placed under severe stress and deleveraging rapidly while government intervention was uncoordinated. In 2020 the banking system remains intact.

September 2020: Retail Sales Growth Slowing

“August retail sales rose by 0.6% relative to July, marking the slowest monthly increase since April. Sales in sectors such as groceries and online retailers were boosted by stay-at-home restrictions and are above pre-pandemic levels. By contrast, while sales in restaurants and bars rose a strong 4.7% last month, reflecting a gradual resumption of their activities, they remained below levels seen in February. This suggests that the services sector is still under pressure from social distancing behavior. On a year-over-year basis, retail sales are up by 2.6%, but momentum slowed in August, coinciding with the expiration of the $600 extra weekly unemployment payments. Services spending will likely remain depressed until we see the widespread distribution of a vaccine. This should contribute to a general slowing of the economic recovery.”