The spread of COVID-19 across the globe has had a dramatic impact on the economy, financial markets, and general sentiment as leaders attempt to slow the spread of the virus via a variety of restrictions. The human impact is sobering, and our thoughts and prayers are with the suffering. Nevertheless, our job is to assess the impact to businesses, industries, and the economy, so that you can make calm, informed business decisions during these difficult times.

COVID-19 is impacting a wide swath of industries — airlines, restaurants, cruise ships, entertainment venues, and more. What has been underreported, in our view, is the second black swan event: the oil price war between Saudi Arabia and Russia following the two countries’ failure to agree on the scope of production cuts. Oil prices plunged from the low $40s to the low $30s per barrel as the market digested nearly simultaneous demand and supply shocks via COVID-19 and increased oil production, respectively. As of this writing, Prices had fallen into the teens.

We have seen this movie before (think 2015-2016). The oil and gas industry is now a key part to the US economy; it uses products from other sectors and drives local economies in several areas of the country. A significant portion of our industrial client base here at ITR experienced the fallout of low oil prices in 2015-2016 and is again poised for that. Keep an especially close eye on your cash position and ensure access to liquidity in the coming quarters.

Prior to the arrival of these black swans, several global and US leading indicators were rising in support of what was then our outlook: a second-half-of-2020 recovery in US Industrial Production. While the swans have increased the probability that recovery will be delayed until later in 2020 or into 2021, demand will nevertheless return, and your business will need to be ready to meet it. This is not only our view, but also that of Federal Reserve Chairman Jerome Powell: “I don’t think anybody knows how long [the COVID-19 economic impact] will be. I do know the US economy is strong and we will get to the other side of this.”

So, as words such as “unprecedented,” “historic,” and “once in a lifetime” color the headlines, remember that the US economy has endured and subsequently recovered from other unprecedented black swan developments. The 1987 stock market crash, the September 11 terrorist attacks, and the sovereign debt crisis of 2011 come to mind. Avoid letting the fear of the moment color your business decisions. Take into account the probability of a weaker 2020, but do not lose sight of preparing for a busier US economy in 2021.