COVID-19 has impacted nearly every aspect of the economy. When President Donald Trump declared the virus a national emergency at the beginning of March, standards of living rapidly shifted: governors enacted stay-at-home orders, learning institutions closed and consumers suddenly faced unprecedented challenges.1 While the travel and tourism industry is seeing record lows, demand for staple foods and hygiene products has surged.
Nonetheless, over half of the states in America have begun to ease social distancing measures.2 As reopening efforts continue across the country, here’s how prices for four markets most affected by COVID-19 will change.
1. Staple Foods
The rising prices of staple foods, particularly meat, eggs and produce, will decrease and stabilize. With stay-at-home orders in place and restaurants closed or limited to carry-out only, most people now eat the majority of their meals at home. Pairing these unique circumstances with anxious consumer behavior in response to the virus, we’re seeing inflation of basic food prices. Wholesale egg prices, for instance, nearly tripled in March—yet they subsequently decreased by almost a dollar in April.3 This demonstrates that grocery prices will, and have already started to, return to their baseline as the spread continues to flatten and decline.
2. Toilet Paper and Sanitation Products
The alleviation of coronavirus restrictions will mean a gradual return to normalcy for the sanitation industry. As of March, online purchases of hand sanitizers grew 5,678 percent, while toilet paper purchases grew 207 percent.4 Largely due to initial panic, we experienced a widespread shortage of these products, with 92 percent of selected retailers reporting toilet paper and disinfectant wipes to be out-of-stock.5
Why Did We Experience Such a Shortage?
Essential products, such as toilet paper and hand sanitizer, have governmentally imposed price caps. As a result, the sudden influx of demand caused shortages. This is precisely why complaints of price gouging have risen to the point of having to form specialized investigation teams.6 As the pandemic subsides, price gouging and product shortages associated with it will also.
3. Oil and Gas
The urgency to stay home and limit travel has made an impact on gas prices across the country. Although retail prices averaged at around $1.87 per gallon in parts of the country by the end of April, they saw a steady increase at the beginning of May.7 Oil prices are increasing similarly.8 States continue to relax restrictions, and gas prices are likely to keep rising. This is especially true when considering national skepticism surrounding air travel. As summer approaches, this may cause a revival of leisure car travel and road trips. Of course, there’s still uncertainty surrounding the pandemic’s projected timeline; it’s possible that there could continue to be fluctuations in gas prices.
4. Plane Tickets
Plane ticket prices likely won’t spike back up - at least not initially. Airlines have been hit extraordinarily hard in the wake of COVID-19, with Americans spending 78 percent less on travel than they used to.9 Historically, the travel industry has always rebounded from similarly devastating seasons. The need to travel won’t disappear, particularly following months of strict quarantine measures. Nevertheless, it’s unlikely that airlines will be overcrowded once the pandemic recedes. Concerns about the safety of air travel will continue. In addition, coronavirus will fade gradually; airlines must create an incentive to slowly sell seats again, and that incentive can’t exist with absurdly high prices. The first returning customers will most likely be leisure travelers.
However, fares won’t be cheap across the board, and they certainly won’t be cheap forever. Unforeseen variables such as social distancing guidelines, sanitation standards and airline consolidation could all eventually drive ticket prices back up. If you do choose to purchase a plane ticket while the fares remain low, stay informed of risks and cancellation policies.
The pandemic has redefined what it means to be a consumer and a post-pandemic economy will do the same. The consumer experience won’t immediately return to what it was—but we can trust that economic pressures will lift with time, just as coronavirus will as well.
Keith I. Wilson, CLTC
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