With a 4.8% contraction in the USA GDP during 1Q/20 (focused on the weeks under pandemic-isolation) and the 20.5 million jobs lost in this country, the bigger since Great Depression makes ‘official’ what is obvious: The most powerful country historically, starts an unprecedented economic recession, calling into question its global leadership position.

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However, this announcement of recession is far from new. For the IMF, the projection of economic contractions this year by country includes the US (-5.8%), Japan (-5.3%), Germany (-6.3%), Brazil (-5.3%), Mexico (-6.6%) and a China that went from growing 6.1% in 2019 and 0.5% in 2020. These equations lost distance from traditional maths: In the Covid-19 world ‘minus times minus equals minus squared.’

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The insistence on the ‘unprecedented’ concept is not accidental: in the last three economic crises (2001 = bubble.com, 2008 = financial / real estate, 2015 = commodities) during its process:
- The ‘hit’ happened during a quarter.
- Its impact was more predominant in a group of countries/industries.
- The recovery process after the ‘dark’ quarter lasted a year.

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While in this crisis the ‘hit’ will last two quarters (from March to September 2020), all the countries and industries are affected, and paradoxically the recovery bets forecast that by 4Q/21 global economy will have ‘returned’ to the same place as the end of 2019, or even 4Q/18, of the best times in business over the past decade for companies and entrepreneurs of all sizes and locations.

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The situation will be to resist a context where cash flow will be scarce and poorly distributed, under the IMF warning: if during the ‘Great lockdown’ (the pseudo-official name for this Momentum) global society lives in quarantine mode more than 90 days (according to several experts will happen in ‘two rounds’: right now and a shorter one during the fall), we could expect the global economy to contract 8.9% in 2020, and in the end, businesses will lose at least THREE TRILLION DOLLARS (USD 3,000 .000.000.000)

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The same would cost to ‘close’ the world’s Oil and Gas industry, or ‘roll back’ global economy ten years… ‘The most worrying thing is that there are those who think that in October this will end when at least thirteen or fourteen months are to go,’ says Marian Salzman, whose foresight review has been dictating global trends for two decades. Also, a columnist for Forbes USA (https://www.forbes.com/sites/mariansalzman/), and with whom I have ‘crossed’ paths for many years between Mexico City, New York, Atlanta, or Zoom… a great friend from knowledge.

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As the gap between crisis winners versus vulnerable class grows, the middle class begins according to Salzman’s a process of ‘implosion and stagnation, where the most worrying thing will be how they lose their dreams,’ and Governments/Producers are put to the test to avoid UN’s “biblical hunger,” all economic research begins to ‘put cards together’ to explain recession’s real impact.

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Starting from the premise that the recession ‘emulates’ a pandemic itself: affecting everyone without discrimination while multiplying daily (with the difference that there are no ‘asymptomatics’ as in Covid-19), can be defined the type of impact from three approaches related to the measures (or consequences) necessary to reduce the level of contagion:

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First group: industries that stopped activities to avoid the massive spread of Covid-19, which have had a forceful contraction, rethinking their business model from the essential to confirm the continuity of its leading players in the market, that today they are seeking a government bailout (whatever it may be).

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Oil & Gas, Hotels, Restaurants, Education, Massive Events, and domestic and international transportation, where the impact can leave, in the worst-case scenario, a cut of around 20% of the workforce of these industries (ILO). Here are the entrepreneurs and business people who are watching the effort of their lives go away. Those who are rethinking the wheel, like restaurant owners around the world. Cheer up!

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Second group: Industries that seek/forced to decrease ‘kilometers/miles’ of their value chain, from the consequences of a moment where their categories purchases increased substantially (masses buying soap or fighting for toilet paper… between amusing, worrying, and ignorant) and could not ‘taken advantage of,’ either by increases in logistics costs related to confinement, or the impact of currency exchange rates. With exceptions, related to the industries that did not manage to get into the essentials in their countries.

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We are talking about the majority of FMCG’s, which have dedicated over the last three decades to decentralizing their processes. But COVID ‘has come’ to replace Arbitration with Aggregation as the center of their multinational strategy. If not, they will be outdated forever… Pankaj Ghemawat’s globalization model starts shifting towards global brands with local production as if we were in 1982. So Vintage… So cool!

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Finally, a third group, where you find the more significant part of services: finance, accounting, legal, marketing, research, comms, advertising, etc., and of course retailers, where digital migration made a forceful leap seeking to avoid contagion.

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Understanding that largest retail chains (supermarkets, pharmacies, etc.) will continue to have POS, while according to the US Chamber of Commerce, purchases on that country via Internet grew by 25% during March, an additional 35% in April, and those of supermarkets on e-commerce platforms, doubled.

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Long live to King Bezos! The unsurpassed winner of this Momentum. Meanwhile, 'the corporations that had their business model centralized and as a central asset their real estate properties are going bankrupt one after another because with the pandemic the economy migrates from the Real to the Unreal Estate' confirms Salzman in his Post-COVID forecast.

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And for the in-house workforce the challenge will be productivity, economists like Nicholas Bloom (Stanford's researcher and defender of home office since forever) who affirms that in this reality "while we are with children at times, in spaces not created for this, few alternatives, schedules, or office days, white-collar workers start losing common thread and agility. "

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Marian Salzman jokingly calls it 'QST' (Quarantine Standard Time), but you get real it seems like performance skills will replace people skills for HR'S. While Amazon, Facebook, Google, Nationwide Insurance, LVMH, Zillow, and more corporations confirm that they will continue from home until the end of 2020. No need to worry; four / eight hours a week they will be visiting empty corporations. It seems like a good time to invest in a desk and chair. Your spine will thank you.

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The tangible changes in each industry are being built and also visualizing... airline tickets will increase by 50%, a hotel nights 40% less, groceries 15% more... but in general terms, and to create a global narrative of this recession, we can review it through five core consequences:

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ONE. "At least a fifth of the jobs that existed before this recession will  be useless." And of course Salzman, like all global experts/tweets, talks about the need to 'reinvent yourself'… a concept that purposely begins to tire due to the effect of repetition. What happened with 'stay home' about eight weeks ago.

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However, it is worth to reflect on this, beyond a personal(ity) transformation, what is essential to understand is that, if you have a job, your industry will change and that implies that your career will also, and if you lost it finding another will be more difficult than expected because industries are going to contract and become more tech-efficient. When it comes to exploring what else to do, the paisas (Medellín, Colombia) call it 'rebusque.'

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TWO. The socioeconomic divide in most countries works by checking people across six segments. After understanding that the mix between the increase in poverty figures where we talk about hundreds of millions (Natalia Ponce de León will always tell me that 'is the time to not forget the most vulnerable.' Remember this); and prices increases in various consumption categories, related to life before Covid-19, it will make it migrate to think into eight segments.

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The two new 'social groups' will be made up of 1) a group between segments' one' -poverty- and 'two' -vulnerable-, and 2) another above segment 'six' -A-, which we will call 'A +, 'which is really about making people belonging to 1% of the world more visible in society. In exchange for these two new segments, the 3 / medium class... the most important 'is going to have an imminent implosion.'

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THREE. Social distancing becomes the best expression of luxury. And of course of comfort, which will mobilize the entire value structure of real estate, making those with more income move to live outside of large cities / have two houses, the affluents move to apartments and houses with more meters, the middle class unify their families in better spaces, etc.

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Of course, this will impact the entire real estate market globally, where the concept 'location, location, location' is changed to 'space, space, space.' The uncertainty around possible episodes like this will alter social tastes, parties, etc., where although the social need of the human being will prevail, from now on, 'less is more' is the rule (on the check also).

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FOUR. One of the best alternatives to migrate your business to the new normal will be related to the need of different categories to move towards people's homes. From restaurants, stylists, and much more, 'they will make a transformation, where today's entrepreneurs will be more like MiniAmazons than app developers' confirms Salzman, thinking of the new creators of business initiatives.

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In China, according to Nielsen, offline shopping has decreased by 12% with the pandemic, while WeChat and Alibaba have had transaction growths of 35 and 33%, respectively.

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As for divergent purchasing channels (on a global basis) related to influencers and platforms such as Instagram and TikTok, we will be talking about an increase in new buyers of 98% and sales of 15%.

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FIVE. The other path that begins to generate opportunities for different producers is based on the migration towards selling a service that complements a Core Business. From selling home care products to having providers of this service with high disinfection protocols, from selling shampoo to providing instructions to act as a stylist in quarantine, from selling cars to supporting transportation services for doctors, anything is possible.

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And if we add to this that, as Salzman says, 'with the Covid-19 situation the difference between supporting communities and doing branding starts to blurred', in addition to that history show us that on wartime, government becomes the primary business provider (like Burberry, Louis Vuitton, or Prada factories that currently are dedicated to making medical clothing and alcohol) seems like a good time to rethink, even start again, strategies and innovation plans. Several multinationals are in those.

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As the recession continues, people will continue to explore new skills at home, understand the importance of home economics, and become more efficient with the use of money. Reminiscent of the trade of housewives where the administration of the home generates well-being for all its members. Don't be surprised if some of the new unemployed ends up dedicating themselves (men or women) to giving the family more time to be productive.

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For those who remain afloat in their jobs and ventures, it is essential to influence a change of mentality in the management teams, managers and business owners, because continuing to hope that everything will return to how it was before, seems to make no sense, at least until that science brings a vaccine and the uncertainty disappears. Go Oxford!

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The important thing today is to understand that under Charles Darwin's evolutionism 'the species that survive are not the strongest, nor the fastest, nor the most intelligent, but those that are better adapted to change.' And while in 1929 people had no options, today the world is full of them. The past is over!

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