The CEO of a media company recently asked me about my thoughts regarding the near-term and long-term future of the economy due to the COVID-19 crisis. The conversation turned to what type of recovery would we see and how long will it take. What do executives need to know and how can they prepare for the rebound. Here are a few thoughts from a data science perspective.
We aren’t out of the woods yet.
At 5EA, we are modeling the virus spread and population effects as best as possible with the data we have available. We are providing insights to our customers about the virus growth curve, with a focus on NY and projecting when the peak will come. The virus as Dr. Fauci, Director of the National Institute of Allergy and Infectious Diseases, states, “has its own timetable”, and therefore the public’s participation of government recommendations and guidelines is critical to slowing the spread and ultimately the start of the recovery.
Starting the Engine
When we reach the peak of the virus, which will occur in different parts across the country, the economy will be like car accelerating. We should see regional recoveries which would then lead to a more national and then global recovery. The Great Recession of 2008, saw negative GDP from the beginning of the recession in Sept 2008 until the 3rd Quarter of 2009. A key difference between 2008 Recession and our current economy, is it’s strong structural foundation. No other recession has ever been characterized by a voluntary shutdown of an economy. Therefore, according to our preliminary research, we feel that a recovery should be quick and the acceleration will be rapid, targeting somewhere around 4-6 months after parts of the economy starts between May 1st and May 25th.
Be Smart, Use Your Data
Your company’s recovery will be dependent on actions you take now. Start by examining where you would have been had the shutdown. Leverage your data prior and post shutdown to examine changes in your customers, or their behavior. Using this data you can begin to make projections about how your economic conditions will change when the recovery starts and is complete.
The more data you can collect and analyze the better you will be prepared for the recovery. We at 5EA strongly believe that companies that can leverage data science will be in a far better position to explore new opportunities and manage the intermittent shocks that will occur in the coming months.
What are some specific actions you can take
a) Analyze the change in your customers – you may have seen an influx of customers based on the business you are in. If this is the case consider yourself lucky, however, these customers may not stay with you. They may have used your service due to convenience and they may exit when this is over. Conversely, if you have lost customers, many of those customers will come back, but you must stay in touch with them. Now is a good opportunity for brand and product awareness projects.
b) Model your revenue – Many companies, will see a strong dip in revenue. Begin using the growth curves of the virus as a factor in your equations. The virus itself doesn’t have a direct economic effect, but its an indicator of government responses. By modeling the virus in different areas of the country or world, you can get a better idea of how your revenue curves will react to government policy
c) Target – Allow data science models and classifications to help target areas and identify products that will be in demand. Your previous models, if you have them, will assist greatly in this effort. Connect these previous models with new short term models from the above recommendations and you could generate some very specific insights.
d) Research – With the downturn, now might be the time to revisit some data projects you haven’t had the time to do. Every company has a significant amount of data and as such should leverage the time wisely to prepare for the rebound.
In the coming days, we will be providing more information about virus growth, and economic projections. If you have some specific questions or are in need of assistance and would like to talk to one of our data scientists reach out to us at firstname.lastname@example.org and we would be happy to assist.