Contraction of Global GDP

We are in the middle of a quarterly reports season and especially next week with Google, Tesla, Apple and others will be interesting. Last week gave us some hints too, but still it seems people do not listen. Complacency is high. It almost seems like most are considering what happened in March and April as a short gap, a kind of vacations, expecting things getting back to normal soon.

Yes there will be back to normal, except this will be new normal.

On a press conference Intel nailed it with three words: "contraction of global GDP" (PDF).

Talking to people and fellow entrepreneurs, they point to me the business outlook does not look bad and expect resume of activities as soon as the lockdown is lifted. But when I asked them about new business won after COVID, they could not name a single contract. All they have in the pipelines are contracts that are results of before-COVID (BC) activities. Simply put - inertia.

It seems there is still significant inertia in the economy and the fact, for example, the automotive factories are restarting, is mostly due to the old orders they aim to fill. I would very much love to see how many new cars they sold AFTER COVID (AC). And who is buying and how much. The same question I would love to have answered by other companies which are in -what can now be considered - non essential category. Like Apple: how many new iPhones or MacBooks they sold AC.

It is very likely we are not going to hear any of these numbers this week. But it will be very interesting to watch for these indicators during Q2 and especially in July when Q2 numbers will be published. It seems like the reality check will come later this quarter. The inertia will not be present anymore and people will realize things are no longer the way they used to be. Altitrade Partners posted an excellent (albeit extremely scary) piece on Seeking Alpha. It exactly mirrors my gut feelings. The good news is - I feel myself (as well as my business) prepared for this long Winter that is coming this Summer. A surprise - if any - will be a positive surprise. Fear not. Just prepare yourself: think April has been the first of many months' like that to follow.