Cash will get you through the coronavirus, so preserve it

Perhaps the stock market should reconsider its optimistic stance on how the U.S. economy will emerge from the worst of the COVID-19 pandemic.

How companies are thinking about their finances right now pretty much says it all.

“There is no question that cash is king right now. And a lot of clients that I talk to are really looking for how they can leverage technology to drive structural cost savings. I think you’re going to see the winners in this process accelerate in their migration to the cloud. There’s a lot that can be offered in the way of taking structural costs out that’s going to preserve the cash they are going to need to get through the uncertain period of growth,” Accenture North America CEO Jimmy Etheredge said on Yahoo Finance’s The First Trade.

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A new report from Accenture released Tuesday offers up a harsh reality into the recovery process for the U.S. economy. One thing is abundantly clear from reading the report’s findings: a recovery will be a very bumpy process that will play out over time. In other words, talk of a V-shaped snap-back economic rebound among Wall Street pros may be quite far-fetched.

Accenture outlines four potential scenarios for the economy.

• Cyclical outbreaks: COVID-19 infections are controlled in past locations, but spread to new hot spots and rebound in old. This scenario has started to emerge in the past week in Wuhan, China, and South Korea post business re-openings and loosening of social distancing requirements. Patience wears thin with social distancing, opening “societal fissures,” Accenture says. And economic recovery delays, ultimately.

• Rapid remission: The coronavirus is contained, and life returns to normal swiftly. Government measures work fast to stabilize the economy. This scenario currently appears remote seeing as COVID-19 testing remains limited and there is no vaccine.

• Prolonged Chaos: Effects to control the virus seem useless. Governments and societies are strained to the point of breaking. The economy is limited to necessities and inflation soars. This also seems unlikely as it stands presently given the flattening in the infection and death curves.

• Flattened curve: The rate of inflation is slowed, but does not go into remission. The economy shrinks in near permanent ways. Society bends but doesn’t break.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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