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COVID-19: Impact on US Economy and B2B Exhibition Industry
15 July 2020
Cathy Breden, CMP, CAE, CEM
CEO
Center for Exhibition Industry Research
CEIR Foundation Donors
• Contributions of $100,000 or More
• Association of Equipment Manufacturers
• GES
• Contributions of $40,000 or More
• Freeman
• National Association of Broadcasters (NAB)
• Contributions of $20,000 or More
• National Shooting Sports Foundation
• New Orleans & Company/The Ernest N. Morial Convention Center
• Shepard
CEIR Foundation Donors
• Contributions of $5,000 or More
• Access Intelligence
• Atlanta Convention & Visitors Bureau
• Experient, a Maritz Global Events Company
• Los Angeles Tourism & Convention Board
• Map Your Show
• NYC & Company
• Philadelphia Convention & Visitors Bureau
• Nashville Music City Center
• VisitDallas
• Visit San Antonio
CEIR Foundation DonorsContributors:• Atlanta Convention & Visitors Bureau• Sharon Baird• Cathy Breden, CMP, CAE, CEM• Chris Brown• Chicago Regional Council of
Carpenters• Choose Chicago• Tom Cindric, CEM• Nancy Drapeau, PRC• David DuBois, CMP, CAE, FASAE, CTA• Experience Grand Rapids• Karen Gonzales, CMP• Chuck Grouzard• HFI Event Services• IAEE Midwestern Chapter• IAEE Southeast Chapter
• Rick Jennings, CEM• Tim McGuinness• Michael McMahon• National Automobile
Association• Brooke Pierson• Susan Schwartz, CEM• Ian Sequeira• Timothy Sheetz, CEM• Marsha Temple• Visit Dallas
Allen Shaw, Ph.D.
President & Chief Economist
Global Economic Consulting Associates
7
Outline
• COVID-19 – have new confirmed cases passed the peak?
• Fiscal and monetary policies – are they big enough?
• Economic recovery – a U-shape recovery on the way?
• B2B exhibitions – another lost decade?
8
A disturbing resurgence of COVID-19 cases
0
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New Confirmed COVID-19 Cases, 7/7/2020
W. Europe W. Europe, 7-day Moving Avg. U.S., 7-Day Moving Avg. U.S.
7/6/2020
9
New York
Florida
New Jersey
Arizona
Daily confirmed new cases (3-day moving average)
10
Economic recovery is losing momentum in July.
Lack of consistency in criteria for markets to open
• Number of phases to reopen varies
• No consistency➢Ranges from three to six phases, or other rules, requirements that can be
more subjective (https://www.nga.org/coronavirus-reopening-plans/)
Monetary policies: unprecedented easing measures to assure ample liquidity (credit & cash) in the economy
• March 2: Cut interest rates by 50 basis points
• March 5: Slashed rates by 100 basis points to near zero, restarts large-scale asset purchases
• March 16 to 31: range of measures launched to increase liquidity in financial markets and promises unlimited, open-ended large-scale asset purchases, including purchases of corporate and municipal bonds.
• April 9: provides unprecedented $2.3 trillion in emergency loans to small and midsize businesses, as well
as U.S. cities and states.
Three phases of fiscal “rescue” programs: are big, but more is needed.
• Phase 1 - $8.3 billion for health agencies and initial small business loans
• Phase 2 - paid sick leave ($105 billion in tax credits), unemployment benefits and food assistance
• Phase 3 - $2.2 trillion via The CARES Act
• Phase 3.5 - $484 billion Paycheck Protection Program and Health Care Enhancement Act
• Phase 4 – in the works
The COVID-19 economic downturn is unique.
Great Depression Triggered by Demand
Shock
Stock market crash (10/29/1929) lead to a loss of business and consumer confidence which resulted in a
protracted decline in investment and consumption expenditures
Liquidity crisis caused by bank failures and bank runs
Limited fiscal stimulus spending as the government trying to balance the
budget
2008 Great Recession Triggered by Demand
Shock
Bursting of the housing bubble that started in 2004 resulted in severe
contraction of liquidity
Collapse in car sales and housing construction
2020 Recession Triggered by Supply
Shock
Stay at Home Orders, Lockdown – has temporarily shuttered non-essential
businesses
Lower productivity of working employees
Mortality
Retail sales surged in May
1.5
-0.1
1.6 0.5 0.4 0.4 0.6 0.4
-0.4
0.5 0.0 0.1 0.8
-0.4
-8.2
-14.7
17.7
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
400
415
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505
520
535
Jan,2019
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan,2020
Feb Mar Apr May
M-O
-M %
Ch
g.
Bill
. $
Retail and Food Services
M-O-M % Chg, Right Retail Sales, Billion $, Left Source: U.S. Census Bureau
Ditto for business activities
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July,2019
Aug Sep Oct Nov Dec Jan,2020
Fed Mar Apr May June
ISM Diffusion Index
Non-Manufacturing Manufacturing 48.5 42.8
… and payroll employment
269 1 147 210 85 182 194 207 208 185 261 184 214 251
-1,373
-20,787
2,699
4,800
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-25,000
-20,000
-15,000
-10,000
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01
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Feb
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Ap
r
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Jun
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Au
g
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c
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02
0
Feb
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Ap
r
May
Jun
Mill
ion
s
Nonfarm Payroll
Changes in Employment, Left Total Nonfarm, Right Source: BLS
Table 1: Employees on nonfarm payrolls by selected industry, Thousands
February May June ChangeChange From
February
Total NonFarm 152,463 133,002 137,802 4,800 -14,661
Total private 129,718 111,759 116,526 4,767 -13,192
Leisure and hospitality 16,867 9,952 12,040 2,088 -4,827
Food services and drinking 12,303 11,866 7,689 9,172 -4,614
Accommodation 2,091 1,066 1,305 239 -786
Arts, entertainment, and 2,472 1,197 1,563 366 -909
Retail trade 15,672 13,659 14,399 740 -1,273
Food and beverage stores 3,090 3,096 3,127 32 37
Gasoline stations 947 893 908 15 -40
Other 11,635 9,671 10,364 693 -1,271
Construction 7,639 7,009 7,167 158 -472
Health care and social 20,758 18,857 19,332 475 -1,426
Professional and business 21,550 19,414 19,720 306 -1,830
Local Government 14,679 13,419 13,476 57 -1,203Source: BLS
However, initial claims for unemployment insurance remain high.
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1,000,000
2,000,000
3,000,000
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Initial Claims
7/4, 1,314,000
Most likely, it will be a V-shape recovery.
-5.0
-33.6
17.7
7.0
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-30.0
-20.0
-10.0
0.0
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Q1 Q2 Q3 Q4
% C
han
ge, S
AA
R
Blue Chip Consensus, 2020 Quarterly Real GDP Growth, SAARJuly 10, 2020
Forecast
Relatively large forecast range
-5.5
-7.0
-4.1
3.9
2.2
5.8
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
Median 10 Lowest Avg. 10 Highest Avg.
% C
han
ge
Blue Chip Consensus, Real GDP Growth, July 10, 2020
2020 2021
Not applicable
Worse Case
Best & Baseline
Cases
Stress Case
Not likely
Scenario Analysis
Source of the picture: https://www.wsj.com/video/alphabet-economics-why-the-old-rules-of-recoveries-may-not-apply/3D1BC828-BE28-45AB-9E60-F31502D5B258.html?mod=searchresults&page=1&pos=2
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Scenario Analysis
2020 2021
Best Case Reach a peak in mid-July -1.7 3.5 Partially resume in September
Base Case Reach a peak in mid-July -5.0 4.8 Partially resume in October
Stress Case Reach a peak in mid-July -8.3 3.1 Partially resume in October
Worst CaseReach a peak in mid-July but
second wave starts in October-10.0 1.0 Resume in April-June 2021
ScenarioNew COVID-19 Confirmed Cases
Real GDP Growth B2B Exhibitions
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Sharp & deep decline followed by a quick recovery
U-shape recoveryu
uuuUU
15,000
15,700
16,400
17,100
17,800
18,500
19,200
19,900
-40.0
-30.0
-20.0
-10.0
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30.0
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07
Q1
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Q1
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Q1
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Q1
Bill
. of
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$
% Change, SAAR, Left Real GDP, Bill. of 2012 $, Right Source: BEA & CEIR
Real GDP
V-shape recoveryuuuuuuUU
Forecast
U-shape recoveryu
uuuUU
26
CEIR expects a full recovery by 2021Q4.
1.9
-0.1
-2.5
2.6
1.62.2
1.82.5
2.9
1.62.4
2.92.3
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Real GDP, Level & % Change
% Change, Right Real GDP, Bill. of 2012$, Left
Forecast
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72.6% cancellation in March lead to a plunge in exhibition performance.
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Fear of flying will reduce attendees and exhibitors.
0
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1,000
1,500
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2,500
3,000
3/1 3/8 3/15 3/22 3/29 4/5 4/12 4/19 4/26 5/3 5/10 5/17 5/24 5/31 6/7 6/14 6/21 6/28 7/5
TSA Checkpoint Travel Numbers Thousands
2020 2019
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Also timing of when group meetings will be allowed regionally and persistence of no corporate travel policies will be a drag on recovery of the industry.
Source: CEIR June Survey on Impact of COVID-19 on U.S. B2B Exhibition Organizations
POLL:
When do you think the B2B exhibitions industry will fully recover to pre-COVID-19 performance?
• June 2021
• December 2021
• By end of 2022
• Not optimistic the industry will ever recover
31
A full recovery in 2022
Wrap Up• 3 Key Points
➢Health crisis not credit crisis; supply shock not demand shock
➢A V-shape recovery for the economy
➢B2B exhibitions should return to normal in Spring 2022
• Indicators to watch➢GDP: retail sales, ISM diffusion indexes, building permits, payroll employment
& initial unemployment insurance claims
➢B2B exhibition: rate of cancellations and postponements & TSA checkpoint travel numbers
