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Wall Street has bet on a swift recovery from the coronavirus pandemic, anticipating that Americans will fill up restaurants, book vacations, board planes and buy new wardrobes as soon as they get Covid vaccines.

Investors pushed the S&P 500 to a record at the end of 2020, with the index rising more than 70% from the low in March when the pandemic brought much of the economy to a halt.

And now, a sluggish rollout of the Covid vaccines threatens Wall Street’s rosy outlook. The U.S. had administered about 16.5 million doses as of Wednesday, less than the 20 million it planned to complete by the end of 2020.

New complexities with the disease could also jeopardize the path to some degree of normal: More contagious variants of Covid have emerged. Los Angeles has become a severe hotspot. The U.K. has locked down again. And U.S. economy saw job losses in December for the first time since the pandemic shut down the economy in the spring.

With President Joe Biden now in the White House, he takes the reins of a national effort to vaccinate the majority of Americans. He has pledged to have the country administer 100 million doses of the vaccines within the first 100 days of his presidency. He’s also proposed a $1.9 trillion stimulus package that could amount to a shot in the arm for the economy.

The push and pull between wildly different economic forces makes it difficult to predict how consumers will behave and how companies should plan, said Jack Kleinhenz, chief economist at the National Retail Federation.

Consumer behavior and spending will be shaped by current events in the months ahead, too. As news of the Covid vaccines came out in late 2020, the percentage of U.S. consumers who expected to practice social distancing for at least another six months dropped from 49% in late October to 34% in early December, according to a weekly survey by UBS Research.

However, that rose to 40% in early January with reports of a confusing and slow rollout of the vaccines and more contagious strains of Covid-19, according to UBS.

Low-income Americans are hit harder by every recession, JPMorgan Chase CEO Jamie Dimon said at a virtual conference hosted by the National Retail Federation last week. With this recession, however, he said that gap has been dramatic — and it will influence the recovery.

“In most recessions, the people who lose their jobs are across the whole income spectrum,” he said. “In this recession, almost all the job losses are people making $15 an hour or less.”

Job losses have been especially concentrated among the poorest Americans. Nearly 40% of people living in households with an income of $40,000 or less reported a job loss during the pandemic, according to an annual report by the Federal Reserve.

Americans who work minimum wage jobs for $15 an hour or less bring in under $32,000 or less a year — leaving little room to put away savings or cover the cost of medical insurance, Dimon said.

He said many Americans don’t fully appreciate the depths of the downturn in inner-city neighborhoods where unemployment has risen to 20% and 25% and kids don’t have laptops or reliable internet to attend school remotely.

“Think of the massive suffering in places a lot of us just can drive by every day,” he said.

He said those sharp inequalities have existed for a long time, but the police killing of George Floyd this spring highlighted them and Covid-19 has exacerbated them.

 

That has implications for companies who may cater to a larger number of budget-strapped customers. Walmart Chief Customer Officer Janey Whiteside said almost half of its customers surveyed in November said they worried about the health of the economy and 40% didn’t expect “any kind of speedy recovery.”

She said at the NRF conference that may mean customers gravitate more than usual toward smaller package sizes or make purchases based on price.

But even as some Walmart consumers watch their budgets, the country’s largest grocer saw its U.S. same-store sales grow by 6.4% in the third quarter. Whiteside said the retailer’s focus on value may resonate more with consumers now.

 

The homebody economy

Consumers have picked up new habits and it may take time for them to return to their old ways — even if they have money to spend.

Albertson’s raised its forecast for the year, noting that companies are extending work-from-home policies and more people want to have flexible schedules. The company’s CEO, Vivek Sankaran, said on an earnings call that will drive demand for breakfast and lunch items to eat at home, such as cereal, eggs and pre-made salads.

That conflicts with behavior by some investors. Their appetite for some stay-at-home stocks has dampened in recent weeks as the U.S. has begun to administer the vaccines. Peloton, for example, was up more than 300% from the start of 2020 to the beginning of the first vaccine distributions in the U.S. in mid-December. The shares have been up only 33% since then. Zoom, which was rose more than 480% from the start of 2020 to the start of the first vaccines, has been down nearly 4% since then.

To be sure, there are some exceptions — such as streaming service Netflix, which hit a fresh high this week.

Plus, McKenzie said the vaccines alone won’t repair a broken economy. “It’s whole businesses and industries that have been gutted,” he said. “This isn’t just a ‘vaccine fixes everything.’ I know that’s what people wish it could be.”

 

Reference: CNBC