After the shock of COVID-19, when will the global economy return to a sense of normalcy? Franklin Templeton Fixed Income CIO Sonal Desai examines some key economic activity indicators in the wake of the pandemic. She shares data on recent changes in US consumer behavior which seem to signal people are eager to go back to normal life.

What is foremost on my mind, and in my heart, is the pain that our country is suffering these days and the pain that our African American communities, colleagues and friends are experiencing and have been experiencing for too long. It’s a time for all of us to reflect deeply on the work we need to do to set our country on a better path, starting with everything that we can directly control, in our workplace and in our daily lives.

The economic crisis stemming from COVID-19, likely to be one of the worst of the past 100 years, has disproportionately hit the most vulnerable segments of society. It has exacerbated the inequality and economic difficulties that also underlie the latest protests and unrest. We are now entering a crucial potential turning point in the economic crisis. We still have over three weeks to go to the end of what will be one of the worst quarters in US economic history, and we will have to wait till the end of July to get the US Bureau of Economic Analysis’ (BEA) first estimate of the contraction. We currently expect it might be even worse than our previous estimate of a near-30% decline in gross domestic product in the second quarter (detailed in our US Macro Outlook, “Now Let’s Bend the Economic Growth Curve,” from April 2020).

However, parts of the US economy have started to reopen. Different states are moving at very different speeds: Georgia allowed hair salons, gyms, dine-in restaurants and theaters to reopen already at the end of April—with social distancing and other safety precautions. Texas took similar steps at the beginning of May. Other states like New York, New Jersey and parts of California are still mostly closed, following a much slower timetable.

Allowing businesses to reopen is a necessary but not sufficient condition for economic activity to come back to life. The crucial question all along has been whether consumers would feel comfortable coming back to restaurants, shopping malls and offices once the restrictions were loosened. This will determine how quickly (in some cases whether) businesses can claw their way back to profitability, and how quickly workers will be rehired. Any forecast of the economic recovery ahead relies on assumptions on whether and to what extent people’s behavior will change: Will we feel comfortable flying again in a fully booked airplane? Will we be willing to dine in a restaurant that is half full? Three-quarters full?