Facts, scenarios, and actions for leaders

US: Current Dynamics
and How to Win the Fight
05 August 2020

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 5 August 2020 Version 14.1

COVID-19 BCG Perspectives Series

COVID-19

BCG Perspectives

COVID-19 is a global
societal crisis

Leaders need to drive an integrated
response to navigate the crisis

We at BCG believe that the COVID-19 outbreak isfirst and foremost a societal crisis, threatening
lives and the well-being of our global community.
Society now, more than ever, needs to collaborate
to protect people’s lives and health, manage midterm implications, and search for lasting solutions.

It is the duty of health, political, societal, and businessleaders to navigate through this crisis. A complex
interplay of epidemic progression, medical response,
government action, sector impact, and company
action is playing out. This document intends to help
leaders find answers and shape opinions to navigate
the crisis in their own environments. It encourages
thinking across the multiple time horizons over which
we see the crisis manifesting itself.

Source: BCG

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Objectives of this document

The COVID-19 recovery will be driven by disease progression, de-averaged
economic impact, government policies, and business and public responses
Fight

FutureTypically in the initial phase after a pandemic
outbreak, the goal is to urgently limit numberof new cases, especially critical care

Finding paths to collectively fight the virus,
restart the economy, and support society inbalancing lives and livelihood

Disease controlled through vaccine/cure/herd immunity and treatment withinsustainable medical capacities possible

Social distancing (lockdown) and partial businessclosures lead to economic recession with a large
employment impact

Increasing economic activity with recovering
GDP, some business reopenings, and social
distancing on a sustainable level

Reactivated economy with strong businessrebound and job growth, social restrictions
limited or completely suspended

1. Disease progression, healthcare system capacity, and response
2. Government policies and economic stimulus
3. Economic scenarios
4. Business engagement and response
5. Public engagement and response

All of the above five factors result in specific economic and social outcomes in each phase
Source: BCG

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Flatten

The US saw a massive surge of new cases in July, putting stress on the recent
rebound in economic and business activity
As of 01 August 2020

Infections swamp the U.S., which
recorded 42% of all its coronavirus
cases in July

July 27, 2020

Disadvantaged groups including
those with health conditions and thepoor hit hardest by COVID in the US

July 28, 2020

July 27, 202027 states have paused or rolled backtheir reopening plans and imposed
new restrictions due to rise in cases

World's largest coronavirus study
begins final phase of vaccine testingin the US

July 24, 2020

Businesses hit hard by pandemic
drive US jobs recovery, recalling
millions of laid-off workers

July 24, 2020

US business activity hits six-monthhigh in July, but seeing a drop in neworders as number of new cases rises

July 27, 2020

U.S. manufacturing sector regaining
momentum, but surging virus cases
threaten recovery

July 30, 2020

U.S. economy suffered its sharpest
downturn since at least the 1940s;
GDP shrank 9.5% in the 2nd quarter
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Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 5 August 2020 Version 14.1

August 01, 2020

US summary snapshot | Current dynamics at a glance
As of 03 August 2020

Consumer Activity

Epidemic snapshot

Business Impact

Mobility9Purchasing manager's index (PMI)13

4.7M

60K

2.3M

155K

Month vs. Jan–mid-Feb '20 baseline May

June

July

Base = 50

May

June

July

total cases

new cases1

active cases

fatalities

Workplace

-37%

-30%

-33%

Manufacturing PMI

40

50

51

Services PMI

38

48

50

May

June

July

Public transit

-38%

-29%

-28%

MoM growth of new cases2

0.8x

1.2x

2.2x

Retail & recreational

10

12

12

-27%

-16%

-15%

Industrial production# of tests / cases3

1.6x

June

July

YoY changes
Manufacturing index

July

1x

May

June

0.6x

YoY changes

May

MoM growth of hospitalizations4

-17%

-11%

N/A

ICU beds availability5

40%

38%

39%

Domestic air travel bookings10

-82%

-69%

-77%

Mining index

-14%

-17%

N/A

Hotel occupancy

-52%

-42%

-36%

Utilities index

-7%

1%

N/A

Economic Impact

Consumer spending

Employment impact

May

June

July

Unemployment claims (M)

10.3

6.3

Permanent job losses (M)2.3

Job vacancies (YoY change)6-37%

GDP forecasts (%)

IMF (24 June)-10 -8 -6 -4 -2 0 2 4 6-8.0%
Baseline 2.0%8
2020
Baseline 1.7%8
2021

4.5%

Trade14Month vs. Jan'20

May

June

July

YoY changes

May

June

July

4.9

Overall spending11

-15%

-8%

-6%

Total exports

-33%

N/A

N/A

2.9

N/A

Online spending12

35%

27%

21%

Total imports

-27%

N/A

N/A

-29%

-23%

YoY changes

May

June

July

Stock market performance

Retail goods (excl. auto & fuel)

3%

6%

N/A

Month end vs. Jan 02, '20

May

June

July

Passenger vehicle sales

-31%

-27%

N/A

S&P500

-12%

-5%

0%

Restaurant sales12

-32%

-9%

-6%

NASDAQ

-4%

6%

18%

Out-of-home entertainment12

-93%

-87%

-86%

Volatility Index (S&P500)15

37

28

25

Banks78 10

1. Calculated as seven day rolling average; 2. Calculated as monthly average of daily cases as compared to previous month; 3. Number of cumulative tests conducted and number of cumulative cases till the month end; 4. Calculated as number of individuals hospitalized with COVID-19 at end of month vs. end of previous
month; 5. End of month values; for July, last available data point (14 July 2020); 6. Data as of 29 July; vacancies in terms of job postings; 7. YoY forecasts; range from forecasts (where available) of World Bank, International Monetary Fund, JP Morgan Chase, Morgan Stanley, Bank of America, Fitch Solutions, Credit Suisse,
Danske Bank, ING Group, HSBC; As of reports dated 12 April 2020 to 03 Aug 2020; 8. IMF June 2020/21 forecasts; 9. Mobility values are calculated as the average of monthly mobility changes compared to a baseline from 03 Jan – 06 Feb 2020; 10. Calculated as change in last 14 days rolling average value as compared tosame period last year, July data as of 15 July; 11. Change in average consumer credit & debit card spending based on data from Affinity Solutions; 12. Change in average consumer credit & debit card spending based on data from Earnest Research; 13. PMI (Purchasing Manager's Index) is a diffusion index that summarizes
whether market conditions, as viewed by purchasing managers, are expanding (>50), staying the same (50), or contracting (<50); 14. Includes trade of merchandise & services; 15. Underlying data is from Chicago Board Options Exchange Volatility Index (VIX); Volatility Index is a real-time market index that represents themarket's expectation of 30-day forward-looking volatility and provides a measure of market risk and investors' sentiments; Source: Johns Hopkins CSSE; CDC; Our World in Data; Worldometers; The COVID Tracking Project; US Department of Labor; Financial Times; Bloomberg; World Bank; IMF; Google LLC "Google
COVID-19 Community Mobility Reports"; ARC ticketing data; STR; Opportunity Insights Economic Tracker; US Census Bureau; Earnest Research; Marklines; IHS Markit; US Federal Reserve; OECD; Comtrade, Capital IQ, BCG

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Epidemic Progression

Executive Summary | Current dynamics in the US & how to win the fightAction areas for leaders

We are at a critical moment in the fight against COVID-19:
The US is at an all-time high in daily new cases; representing ~25%of daily cases globally whilst accounting for 4% of global population

Winning the fight will require an integrated epinomics strategy;
an approach that would save lives, strengthen the economy, andpromote a more equitable recovery

Two key population segments remain most impacted:

Action areas for government leaders

1) Health vulnerable (e.g., >65 years age) who are 10x to 30x more
likely to be hospitalized than healthy adults• In geographies where the virus may soon overrun healthcare
capacity; govts. could trigger 5-8 weeks stringent lockdowns

2) Exposure vulnerable who are disproportionately lower-income
and people of color• For the rest, pursue a set of high priority policies1 to reduce
hospitalizations, & enable reopening of schools & businesses

Economic activity remains well below pre-crisis levels;
GDP contracted ~9.5% (Q2'20 vs Q1'20), unemployment rate at 12%

Mobility, consumer & industrial activity saw some rebound in
May & June '20, but impeded by the case surge in July
Controlling the virus is critical to restoring consumer spend;
reopening policies have limited stand-alone impact• Target stimulus packages to sectors and individuals mostimpacted; invest in initiatives driving a more equitable recovery
Action areas for business leaders• Protect employees & customers, adopt proven prevention
methods, & support virus response efforts2• Continue to build financial & operational resilience;transform to win the future by reimagining core offerings

1. Policies for the broad public (e.g., use of face coverings, limiting large indoor gatherings) could reduce hospitalizations up to 40% at low cost; protecting the vulnerable by distributing quality face masks, skewing
testing resources, supporting shelter-in-place, enabling the most vulnerable employees to work from home, and applying best practices to congregate living settings could reduce hospitalizations 40-65%
2. Scale up virus monitoring via sentinel and pooled testing—testing must be strategic vs. reactive; and where possible, redeploy resources to support virus response efforts
Source: BCG

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Epidemic, economic & business impact

Population segments most impacted by the disease
Economic and business indicators

Action areas for leaders
Public policies for safe reopening
Implications for business leaders

6

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Epidemic, economic and business impact

Cases on the rise | US witnessing increased number of daily cases

EPIDEMIC PROGRESSION& HEALTHCARE CAPACITY

As of 03 August 2020

Daily new cases per M population (7-day rolling average)

Key observations for the US
Brazil200

United States

4.7M
Total confirmed cases

180

Spain

160
140

India

120

Sweden100
80

Canada60

United Kingdom

40
20

60K (Δ-1.0%)1
Daily new cases(daily growth rate %)2.3M (48%)
Active cases(% of total confirmed cases)

155K (Δ1.9%)1
Fatalities(daily growth rate %)South Korea

0
Feb

Mar

Apr

1. Growth calculated based on 7-day average
Source: Johns Hopkins CSSE; CDC; Our World in Data; BCG

May

Jun

Jul

03 Aug7

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220

COVID-19 hotspots1 are changing | Shift from Northeast in April
to rest of the country by end of July

EPIDEMIC PROGRESSION& HEALTHCARE CAPACITY

As of 31 July 2020

Top 10 US states2 with highest daily cases per M population3
342
MA

319

300

300
209

RI

April

195

184

180

NJ

MA

RI

453

440

NY

NJ

DE

DC

CT

IL

386

353

348

341

335

334

NE

IA

289

285

US avg

195

TN

AZ

AL GA

LA

Daily cases per
M population3

146

88

NV

July

154

<75

75-150150-300

>300

MS

FL

FL

MS

LA

TN

AZ

AL

GA

NV

SC

TX

• Current top 10 states contribute 53% of new cases4; while top 10
states from April contribute only 7% of new cases4• ~2x increase5 in daily cases from April to July

1. >300 daily cases per M population; 2. Including District of Columbia; 3. Taken as average of last 7 days of the month; 4. Total US cases in July; 5. From 88 in April to 195 in July (last 7 days rolling
average for each month). Source: JHU CSSE; BCG

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NYSeveral current hotspots face the risk of reachinghealthcare capacity limits, including ICUs

EPIDEMIC PROGRESSION& HEALTHCARE CAPACITY

As of 31 July 2020

As of 07 July 2020

Top five states1 reaching ICU capacity limits are also current hotspots2
State

Remaining capacity(7-day average)

ICUs4

Beds5

+125%

17%

26%

+154%

19%

30%

+0%

20%

23%

+125%

22%

23%

+83%

25%

35%

1,559

Alabama
452

544

693
3151

Georgia

1500

878

1239
2516

Arizona
710

2525

912
1138

Nevada6

444

389

506
1411

Tennessee

580
30 April(The COVID Tracking Project)

519
31 May773
30 Jun31 JulHotspot state2

Availability ≤ 25%

Availability >25%

(CDC)

Note: Last quartile states in terms of number of beds are excluded from the analysis; 1. Top five states selected in terms of lowest remaining ICU capacity, descending; 2. >300 daily cases per M population
as of 31 July 2020; 3. 31 July vs. 30 June; 4. ICU = Intensive care unit; ICU capacity remaining implies ICU beds currently available for admission as a percentage of total ICU beds in state; data as of 07 July
2020; 5. Beds refer to hospital beds; beds capacity remaining implies hospital beds currently available for admission as a percentage of total hospital beds in state; data as of 07 July 2020; 6. Data from 1-10
May is not available; is considered to be same as data on 10 May. Source: The COVID Tracking Project; CDC; JHU CSSE; BCG

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vs. previous month3

Hospitalized patients as on date

Two segments most impacted by COVID-19

Health vulnerable

Exposure vulnerable

People older than 65 and/orwith underlying conditions

Living in dense settings or unable towork from home, especially incommunities of color

up to

30x

Higher hospitalization rate
for those older than 65 withpreconditions vs. healthy
adults under 65

Source: CDC; BRFSS; COVID Tracking Project; BCG~2-3x

Higher infection rate
for persons of color vs.
white Americans

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SEGMENTS MOSTIMPACTED BY DISEASEHealth vulnerable | COVID-19 most lethal for elderly with
underlying conditions

SEGMENTS MOSTIMPACTED BY DISEASE

Underlying
condition
statusWith
underlying
conditions1

Without
underlying
conditions

Age

Share of US
population(%)

Share of US
workforce(%)

Estimated hospitalization
rate among those infected(%)2

Estimated fatality rate
among those infected(%)2, 3

≥ 65

7

2

17–25

4–7

50-64

6

6

3.4–5.0

0.4–0.8

18-49

6

9

2.4–3.6

0.1–0.2

< 18

2

0

1.0–1.6

0.1–0.2

≥ 65

10

4

2.0–3.0

0.4–0.9

50-64

14

21

1.3–1.6

0.1–0.2

18-49

37

55

0.3–0.4

<0.02

< 18

18

3

<0.05

<0.01

1. Underlying conditions are those that are identified by the CDC as making people more vulnerable to coronavirus. The underlying conditions
include obesity (a body mass index that is greater than 40), diabetes, chronic heart disease, respiratory disease, and kidney and liver disease;
2. Derived using the CDC’s data on COVID-19 net hospitalizations, South Korea’s hospitalization data, and data from the New York City
Department of Health and Mental Hygiene; 3. Rates do not account for the impact of limited hospital capacity
Source: Centers for Disease Control (CDC); New York City Department of Health and Mental Hygiene; South Korean government; BCG

Higher risk groups
Further reading
Protect the Vulnerable—Protect Us All

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As of 04 July 2020

Exposure vulnerable | >85% of disparate COVID fatalities among Black
Americans driven by increased exposure or decreased testing access

SEGMENTS MOSTIMPACTED BY DISEASE

As of 15 July 2020

68

Fatalities per 100k

32

Whites2-1<5

Difference due tounderlying
health conditions

Difference
due to age

Difference
due to accessto quality
health care

Source: BRFSS (2017) survey data; American Institute of Economic Research; CDC as of 07/15/2020; BCG>85% of differencein fatalities

Difference due togreater risk of
exposure to
COVID-19 and lessaccess to testing

BlacksFurther reading
Bridging COVID-19’s Racial Divide

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We are now early in the Fight phase of the economic rebound

ECONOMIC IMPACT

As of 31 July 2020

Economic
Activity
100

Fight

FlattenShutdown

RestartFutureVaccine / Treatment1

Some sectors(5%) to (30%)(15%) to (30%)

Many potential
outcomes being
considered

off pre-COVID levels

off pre-COVID levels

We are here

Between mid-May& late June
1. Estimated timeframe for a safe and effective vaccine to be developed, manufactured, and delivered on a wide scale to broader population
Source: BCG

Q1 2022,+/- 6 months1
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Pre-COVID-19

Illustrative

GDP expected to contract by ~6-8%1 in 2020 withsome rebound in 2021

ECONOMIC IMPACT

As of 31 July 2020

As of 03 Aug 2020

Largest quarterly GDP contraction2 inpast 70 years3

Current forecasts point toward asevere downturn in 2020% change in real GDP from preceding Q (seasonally adjusted4 )
3%

2019

2020

2021

102
0%

100
98.9

-5%

Dot-com bubble:
Max. contraction2 of
0.4% in Q3 2001

2008 Financial crisis:Max. contraction2 of
2.2% in Q4 2008

COVID-19 crisis:Max. contraction2 (so far) of
9.5% in Q2 2020

98

World Bank

96

(24 June)

94
92
-10%
2000
(OECD)

2005

2010

2015

2020

(08 June)

IMF

95.1
World Bank
(08 June)

IMF(24 June)

97.6
96.1

93.9
92.0

90
Forecast range from leading banks6

1. Range basis latest forecasts from IMF and World Bank; 2. % change in real GDP from preceding quarter seasonally adjusted; 3. Dataset period from 1950 to 2020, represented only for last 20 years;
4. Seasonality adjustment is done to even out periodic swings in the data; adjustment is done by dividing unadjusted value by seasonality factor; 5. As per World Bank, 2019 US GDP in terms of current US$ is$21.4T; 6. Range from forecasts (where available) of JP Morgan Chase; Morgan Stanley; Bank of America; Fitch Solutions; Credit Suisse; Danske Bank; ING Group; HSBC; Source: Bureau of Economic Analysis,
OECD, World Bank, IMF, Bloomberg, BCG

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GDP forecasts from leading banks and institutionsindexed to 2019 value5

Unemployment continues to remain high across several industries

ECONOMIC IMPACT

As of 25 July 2020

Unemployment remains high,with continued (but declined) new claims

Leisure and hospitality among thehardest hit industries

New weekly unemployment claims (M), seasonally adjusted1

Unemployment by industry, compared to June 2019 (M)

6.9
5

3.8

Leisure & hospitality

1.4
0.2
0

2.1

Mar '20

Apr '20

May '20

Jun '20

Jul '20% unemployed weekly (%), seasonally adjusted
20%

17.1%

5.5
11.6%

1.2%
0%

Mar '20

Apr '20

May '20

Jun '20

Jul '20

Jun '19

Wholesale & retail trade

2.1

Education & health services

1.6

Government

1.5

Professional, business services

1.4
1.0

Manufacturing
Construction

3.7

Others2

Jun '20

1.Seasonality adjustment is done to even out periodic swings in the data; adjustment is done by dividing unadjusted value by seasonality factor and then multiplying it by 52; 2. Others include transportation andutilities, other services, self-employed workers, unincorporated and unpaid, family workers, financial activities, mining, quarrying and oil and gas extraction, agriculture and related private wage and salary workers;
Source: US Employment & Training via St. Louis Fed, Bureau of Labor Statistics, BCG

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17.2

Business activity across most sectors witnessed earlysigns of rebound in May and June

BUSINESS IMPACT

Non-exhaustive

As of 26 July 2020

BCG Economic Recovery Pulse Check (ERPC)

120
Healthcare2
Tech, media & telecom

110

Financial institutions

100

Engineered prod & infra3
Auto & mobility

90

Materials & process4
80
Transportation & logistics
Energy0
Feb

Mar

Lockdown started1

Apr

May

Jun

• Activity in healthcare and tech,
media & telecom have
improved year-on-year• Financial institutions;engineered prod & infra; auto
& mobility; materials & process
saw moderate recovery;
currently flat compared toprevious year activity• Transportation & logistics
moved from highest to lowest
activity industry – early signsof rebound seen in May andJune; still far from recovery

26 JulLockdown easing1

Note: ERPC is a high-frequency index capturing sector activity based on 100+ sector specific data sources. It tracks industries in US, EU5 (GER, FR, UK, ITA, SPA), Brazil, China and Japan. Index value of 100
indicates a normal activity compared to previous year's period. Current activity and at normal state are computed with 4-week exponential smoothing; 1. No uniform state-wide lockdown imposed, most states
were in lockdown from 19 March to 25 April; 2. Medical Tech, Biopharma, Consumer Health (excluding Hospitals); 3. Aerospace & Defense, Infrastructure, Machinery & Industrial Automation; 4. Chemicals,
Metals and mining, Building Materials, Forest Products, Paper and Packaging; Source: BCG

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Activity across time for US (year-on-year)

Mobility, consumer spending and industrial activity
still below pre-COVID-19 levels

BUSINESS IMPACT

As of 31 July 2020

Consumer spending

Industrial activity~20% lower~6% lower~11% lower

mobility1 in Jul '20
compared with Jan to
mid-Feb '20 baseline

consumer spending2(online + offline) in Jul '20
compared with Jan '20

total industrial productionin Jun '20 vs. Jun '19(seasonally adjusted)(Google Mobility)(Opportunity Insights Economic Tracker)(US Federal Reserve)

1. Monthly change in mobility levels is calculated by taking an average of the monthly values of workplace, public transit, grocery & pharmacy and retail & recreation mobility; excludes residential, parks mobilities;
2. Change in average consumer credit & debit card spending, seasonally adjusted
17
Source: US Federal Reserve, Google COVID-19 Community Mobility Reports, Opportunity Insights Economic tracker

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Mobility

Workplace and public transit mobility showing slower recovery

BUSINESS IMPACT

As of 31 July 2020

20%

Residential mobility(time spent at home)-20%0%Retail & recreational

-40%

-20%
Public transit-60%

Workplace

-80%
-40%

-60%

Feb

Lockdown started5

Mar

Apr

May

Jun

Current mobility levels are
below Jan to mid-Feb’20 for all
mobility categories except
residential mobility
US showed a >40% reduction in
mobility from end to March toend of April, the month of moststate lockdowns
Retail & recreational mobility
has recovered faster thanworkplace and public transit
mobilityJul

Lockdown easing5

1. Tracked as changes in visits to workplaces; 2. Tracked as changes in visits to public transport hubs, such as underground, bus and train stations; 3. Tracked as changes for restaurants, cafés, shopping centres,
theme parks, museums, libraries and cinemas; 4. Tracked as changes in terms of time spent at places of residence; 5. No uniform state-wide lockdown imposed, most states were in lockdown from 19 March to 25 18
April; Note: Data taken as weekly average compared with baseline (average of all daily values of respective weeks); Source: Google LLC "Google COVID-19 Community Mobility Reports"; Press search; BCG

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Workplace1, public transit2, retail & recreation,3 and residential4 mobility compared to baseline of Jan to mid-Feb'20

Shift towards online purchase continues; lower in-store purchasefrequency & increased transaction size sustaining beyond initial spike
As of 22 July 2020

BCG Lighthouse high frequency data
Offline sales - Grocery | YOY % change vs 2019
Panic creates a bump

150%

Online
sales

100%

100%

50%

50%

0%

0%

Offline
sales

-50%

Feb

Mar

Apr

May

Jun

Jul

22%

22%

33%

33%

31%

30%

During the initial outbreak,consumers bought more
and more often

Divergent behavior
continues
Afterward, consumers buying lessoften, but buying more

-50%

Feb

Mar

Apr

Transaction size (average)

May

Jun

Jul

Total sales

Total transactions

Note: Tracked based on spending data based on consumer credit card/debit card/checking account activity from a panel of US consumers from Earnest Research (tracked responses exclude cash/other); 1. Online
sales include sales of above categories through online channels plus sales of Amazon & online grocery; 2. Offline sales includes store sales of Apparel and Accessories, Beauty, Club Chains, Convenience Stores,
DIY, Department Stores, Dollar & Discount Stores, Electronics, Grocers, Hobby, Home, Mass Retail, Pharmacy; Source: Earnest Research; BCG Lighthouse19

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Online1 vs offline2 retail goods sales | YOY % change vs 2019

Onlineshare

BUSINESS IMPACTOn average, retail goods' sales (excl. auto & fuel) have recovered;retail services continue to be impacted

BUSINESS IMPACT

Retail goods' sales (excl. auto & fuel), YOY % change

Retail services' sales, YOY % change

Includes online & offline sales and comprises food & beverages, apparel,cosmetics & personal care, home appliances, general merchandise,building material; does not include auto, fuel & food services

Includes online & offline bookings/payments of B2C services andcomprises out-of-home entertainment, restaurant services, hotels, airline
booking, other online travel bookings, ride sharing

Retail goods(online + offline)

Feb

Mar

Apr

May

June

4%

7%

-6%

3%

6%

Store sales
Food & beverage stores
General merchandise
stores
Personal care& cosmetics stores2
Apparel stores3
Home appliance stores4

4%

2%
0%
1%
0%

29%

9%
6%
-49%
-18%

12%

-6%
-10%
-86%
-53%

15%

0%
-9%
-62%
-37%

Feb

Mar

Apr

May

June

Out-of-homeentertainment

10%

-46%

-89%

-93%

-87%

Restaurants5

3%

-13%

-15%

-32%

-9%

Hotels

7%

-30%

-78%

-73%

-50%

Online travel
agency

1%

-44%

-77%

-57%

-17%

Airlines

-2%

-45%

-88%

-85%

-69%

Ride sharing

11%

-27%

-85%

-88%

-77%

< -30%-30% to -15%

12%

3%
-6%
-23%
-13%
-15% to 0%>0%

Note: Services sales data based on spending data of consumer credit card/debit card/checking account activity from a panel of US consumers from Earnest Research; 1. Share in overall goods sales based on Q4'19
20
sales: F&B stores-20%, general merchandise stores-20%, personal care & cosmetics stores-12%, apparel stores-6%, home appliances stores-3%; other major categories are online sales (~20%), building materials(~10%); 2. Includes pharmacies & drug stores; 3. Includes accessories; 4. Includes electronics stores; 5. Doesn't include food delivery; Source: US Census Bureau, Earnest Research, BCG Lighthousereserved. Updated 5 August 2020 Version 14.1
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As of 17 July 2020

Manufacturing production rebound in June driven primarily byelectronic products, motor vehicles1 and machinery

BUSINESS IMPACT

As of 27 July 2020

Share2

Feb

Mar

0%

Manufacturing

Apr

May

June

-5%

-20%

-17%

-11%

DurablesElectronic products3

14%

7%

5%

-1%

-3%

2%

Motor vehicles & parts1

7%

2%

-27%

-83%

-62%

-25%

Fabricated metal
products

7%

0%

-4%

-15%

-12%

-11%

Machinery

6%

-3%

-7%

-22%

-21%

-15%

Chemical products

16%

-2%

-2%

-8%

-7%

-6%

F&B products4

12%

2%

0%

-8%

-6%

-4%

Petroleum & coalproducts

6%

2%

-6%

-21%

-20%

-18%

Total manufacturing
production is slowly
recovering from April lows
Motor vehicles and parts1,
machinery are seeing an
uptick; however, still far
from recovery

Non-durables< -30%-30% to -15%

-15% to 0%

Fabricated metal products,
petroleum and coal products
continue to be flat at low
levels>0%

1. Motor vehicles, bodies and trailers, and parts ; 2. Share based on 2019 contribution to GDP (as a percentage of Manufacturing contribution to GDP); Categories on the page total 69% - other major categories
under durables are: other transportation equipment (7%), Miscellaneous manufacturing (5%), others (12%); other major categories under non-durables are: Plastics and rubber products (4%), others (6%);
3. Computer and Electronic products; 4. Food and beverage and tobacco products; Source: US Federal Reserve, U.S. Bureau of Economic Analysis, BCG

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Manufacturing production, YOY % change vs 2019

Population segments most impacted by the disease
Economic and business indicators

Action areas for leaders
Public policies for safe reopening
Implications for business leaders

22

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Epidemic, economic and business impact

Epinomics challenge | Reopening policies do not drive return inconsumer spending; controlling virus critical to restoring economy
As of 21 July 2020

Consumer spending declines
as local cases increase

Average change in overall spending
vs. Jan 20201

Change in consumer spending (%)
vs. Jan 20203

10

R2= ~ 0.03

0Affluent more likely to stay home,driving decline in spending
Change in mobility (%) vs. Jan 20204

-20

-15

-22

-20

-24

-25

-26

-30

R2= ~ 0.9

-10

-20

0

20
Most restrictive

40

60
State

80

100

Least restrictive

State-level composite score of level2of government restrictions-28

R2= ~ 0.7
5

20

150
CountyCounty-level COVID-19 cases per 100K
people (log scale)

1,100

-35
5

R2= ~ 0.820150Counties in top quartile avg. income

1,100Counties in bottom quartile avg. income

County-level COVID-19 cases per 100K
people (log scale)

1. Based on data from July 21, 2020; 2. Composite score of restrictions includes, e.g., requirement to wear a mask in public, travel restrictions, large gathering restrictions; 3. Based on data from
April 1 to April 14, 2020; 4. Based on data from March 25 to April 14, 2020; Source: Anity Solutions; Google COVID-19 Community Mobility Reports; Chetty, Raj, et al; Opportunity Insights; NewYork Times, The COVID Tracking Project; CDC; WalletHub; BCG

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Spending not correlated withgovernment restrictivenessEpinomics action areas for leaders | Requirements to ensure a safer, stronger
recoveryDiseasereduction

Economicrecovery

Source: BCG

Private sector leaders

Where healthcare capacity is at imminent risk,crush disease via swift, stringent lockdowns

Protect employees and customers, especiallythose who are health vulnerable

Where possible, move quickly to contain casegrowth via high ROI policies that protect thevulnerable and reduce spread

Use platform to promote adoption of provenprevention methods

Target stimulus packages on sectors,
individuals, and geographies most impacted

Build financial and operational resilience

Invest in new reality, sustainability & initiatives
that lead to a more equitable recovery

Actively screen employees and where possible
redeploy resources to support virus response
effortTransform to win the future by reimagining
offerings and operations, and accelerating digital

Deep-dive on following pages

24

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Public sector leadersOnly in dire situations:

For as many places as possible:

Crush through short-term lockdown when

Contain to keep cases stable orhealthcare capacity at risk

manageable

Consider reentering a stringent lockdown:
regardless of infection level, any region cancrush the virus with a 5-8 week lockdown with
80%+ reduction in contacts1
Build up virus monitoring capabilities andhealth infrastructure for reopening
Set strategy to protect borders upon
reopening

1. Contact levels must be 80%+ below pre-pandemic levels
Source: BCG

PUBLIC POLICIES FOR
SAFE REOPENING

Implement policies to protect vulnerable
and general public to reduce transmission
Optimize virus monitoring strategy(e.g., skewing tests, pooled testing)Cautiously proceed with phased
reopening, following customized guidelines

Further reading
It's Not Too Late to Crush and Contain the Coronavirus
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Two strategies to reopen the economy and schools at a reasonablelevel, dependent on local virus growth and capacity to control

Crushing the virus | Regardless of current infection levels, any region
can crush the virus in 5-8 weeks by reducing contacts by at least 80%

Contact reduction vs. pre-pandemic levels(in weeks)Starting
infectionlevels(as % ofpop.)

Why did initial lockdowns in the
US not crush the virus?

70%

75%

80%

85%

1%

> 30

11

5

2

10%

> 30

15

8

5

20%

25

14

7

5

30%

16

9

6

5

40%

12

9

6

5

Contact reduction lower than
80% results in unsustainable
period of lockdown for 9+ weeks

1. Crush defined as keeping lockdown in place until new case growth falls to below 1 per 100,000; 2. Gallup survey of Americans reporting'always' practicing social distancing over last day when surveyed.
Source: BCG SIR model; Master Scenario framework; Gallup polling and analysis; BCG

US never locked down
sufficiently and relaxedsocial distancing too soon in
many areas:~ 65% of Americans reported
social distancing in April …
… but only ~40% continued
social distancing by midJune2

26

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Weeks at lockdown required to “crush1” the virus at given
infection level & contact reduction

PUBLIC POLICIES FOR
SAFE REOPENING

Containing the virus | Implementing these six policies could reduce
hospitalizations by 50-90%

PUBLIC POLICIES FOR
SAFE REOPENING

Modeled impact on reduction in hospitalizations

Broader
public-40%

Mandate wearing face coverings in public spaces
Provide high-quality masks to vulnerable and ensure they are wornFive
policies toprotect thevulnerable

-47%

-89%

-27%

-48%

Skew sentinel testing to most health vulnerable, those in close contact
with them, and communities of color

-12%

-25%

Support sheltering in place: providing food, counseling, and social
connections

-10%

-19%

Accommodate vulnerable who cannot work from home: enable local &employer innovation; support shelter-in-place for most vulnerable
Enforce congregate living best practices and standards-15%

Ideal1

-10%

-3%

-9%

-3%

Effective1
1. Ideal represents 80% compliance of a given intervention for vulnerable (50% for broader public), while effective represents 50%
compliance for vulnerable (33% for broader public); studies suggest current compliance range of 33%-50% for mask wearing
Source: BCG

Further reading
A High-Return Strategy for a Safer Reopening27

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Combined impact of all six policies

Containing the virus | Protecting the vulnerable and broad uptake ofmasks could allow most states to open schools and businesses

PUBLIC POLICIES FOR
SAFE REOPENING

Example of a "US average state" that has contained the virus

Reopening requires some restrictions on
general public and high compliance levels

ICU occupancy(indexed to capacity)

3.0

Including mass gatherings

2.5
2.0

Reopening1 schools and somebusinesses, no mass gatherings

1.5

Five policies to protect health-vulnerable2

1.0

While reopening schools and some businesses, no mass gatherings

ICU capacity

Five policies to protect vulnerable, plus
general face-covering mandates2

0.5

While reopening schools and some businesses, no mass gatherings

0.0

Week: 0

1

2

3

4

5

Businesses and schools reopen

6

7

8

9

10

No time to wait – must act quickly

1. Assumes that schools and businesses reopen but basic social distancing measures (for example - limiting interactions to less than pre-pandemic levels and banning mass gatherings)
remain in place throughout the duration of pandemic; this is a US average; 2. At 50% compliance. Studies suggest that current compliance with mask wearing ranges from 33% to 50%.
Source: BCG

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Full reopeningSafely reopening schools is paramount | To reopen schools, critical to
get local spread under control & take steps to limit infections at school
Virtual learning means some students may fallbehind, increasing urgency for school reopening

PUBLIC POLICIES FOR
SAFE REOPENING

If safe for schools to reopen, these 6 levers
can reduce virus transmission significantly

17%of students don't have homeinternet

Protecting vulnerable students, teachers, and their families
Weekly screening of all students (e.g., via pooled testing)

13%
pts

less likely for schools with more
students of color & students inpoverty to have a distancelearning plan1

14%of students require special
education services

Classes split into bi-weekly A/B teams
Staggered class start times
Providing safe transportation alternatives to-and-from school
In a European country with low levels of transmission,these levers estimated to reduce transmission >80% based on models

1.. 32% of largest non-CGCS (Council of the Great City Schools) districts vs 19% of largest CGCS districts have a distance learning plan.; as of 26 May'20
Source: Learning English VOA news, ITU, WFP, BCG

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Compulsory face coverings

Private sector leaders also need to lead the way in fighting the virus;
three imperatives emerge

IMPLICATION FOR
BUSINESS LEADERS

As of 30 July 2020

Select examples

Use platform to promote
adoption of provenprevention methods

Actively screen employees andwhere possible, redeploy resources
to support virus response effort

Global food processing player isproviding paid leave to nearly
3,000 health vulnerable employees1

Several large retail and foodcompanies established companywide mask mandates

Large American industrial goods
players are producing ventilators
through Defense Production Act

Telecom conglomerate identified
task force to redeploy vulnerable
to work-from-home roles

Large consumer goods company
released print ads urging people touse sanitizers and masks

Global food player to establish onsite weekly sentinel testing2

Leading 'Big Tech' companies taketemperature checks of
employees before each shiftNot-for-profit health org. provided
clear COVID-19 fact base toemployees, including targeted
outreach to communities of color

Leading supermarket chain
providing at-home testing kits tosymptomatic workers

1. Offered to all employees aged 60 and above, and/or at higher risk for serious complications from COVID-19, as defined by CDC guidelines; 2. Sentinel testing involves testing people
randomly across community, including those who are apparently well, in order to discover unseen transmission.
Source: Washington Post, CEO letters, Presidential Remarks on July 28, 2020; BCG

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Protect employees andcustomers, especially those whoare health-vulnerable

Edition #13

Edition #12

Edition #11

Edition #10

Global Restart:
Key Dynamics

Ensuring an Inclusive
RecoveryAccelerating Climate
Actions in the New Reality

Value Protection and
Acceleration Roadmap to
Win in the New Reality

Edition #9

Edition #8

Edition #7

Edition #6

Future of Global Tradeand Supply Chains

Galvanizing Nations for
the New Reality

Sensing Consumer Behavior
and Seizing Demand Shifts

Restructuring Costs, andManaging Cash and Liquidity

Edition #5

Edition #4

Edition #3

Edition #2

Revamping Organizations
for the New Reality

Accelerating Digital &Technology Transformation

Emerging Stronger
from the Crisis

Preparing for the Restart

Source: BCG

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Additional perspectives on COVID-19

Disclaimer

The materials contained in this presentation are designed for the sole use by the board of directors or senior management of
the Client and solely for the limited purposes described in the presentation. The materials shall not be copied or given to any
person or entity other than the Client (“Third Party”) without the prior written consent of BCG. These materials serve only as
the focus for discussion; they are incomplete without the accompanying oral commentary and may not be relied on as astand-alone document. Further, Third Parties may not, and it is unreasonable for any Third Party to, rely on these materials
for any purpose whatsoever. To the fullest extent permitted by law (and except to the extent otherwise agreed in a signed
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for the foregoing.
BCG does not provide fairness opinions or valuations of market transactions, and these materials should not be relied on orconstrued as such. Further, the financial evaluations, projected market and financial information, and conclusions containedin these materials are based upon standard valuation methodologies, are not definitive forecasts, and are not guaranteed by
BCG. BCG has used public and/or confidential data and assumptions provided to BCG by the Client. BCG has notindependently verified the data and assumptions used in these analyses. Changes in the underlying data or operating
assumptions will clearly impact the analyses and conclusions.
The situation surrounding COVID-19 is dynamic and rapidly evolving, on a daily basis. Although we have taken great careprior to producing this presentation, it represents BCG’s view at a particular point in time. This presentation is not intended
to: (i) constitute medical or safety advice, nor be a substitute for the same; nor (ii) be seen as a formal endorsement or
recommendation of a particular response. As such you are advised to make your own assessment as to the appropriate
course of action to take, using this presentation as guidance. Please carefully consider local laws and guidance in your area,
particularly the most recent advice issued by your local (and national) health authorities, before making any decision.

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The services and materials provided by Boston Consulting Group (BCG) are subject to BCG's Standard Terms(a copy of which is available upon request) or such other agreement as may have been previously executed by BCG.
BCG does not provide legal, accounting, or tax advice. The Client is responsible for obtaining independent advice concerningthese matters. This advice may affect the guidance given by BCG. Further, BCG has made no undertaking
to update these materials after the date hereof, notwithstanding that such information may become outdated
or inaccurate.

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BCGRapidResponseNetwork@bcg.com