The US economy will be stuck in the doldrums until at least late fall and won’t stage a full recovery until early next year, venture capitalist and former Cisco chief John Chambers told Marketwatch on Tuesday.
“Things will get worse before they get better,” Chambers — who oversaw an almost 40-fold rise in the tech titan’s annual revenue to $40 billion while serving as CEO between 1995 and 2015 — said in the interview.
“The next quarter is going to be ugly,” he added.
The novel coronavirus pandemic is wreaking havoc on the economy, the healthcare system, and global supply chains, Chambers said.
Officials have shut non-essential businesses and ordered their populations to stay at home, leading to almost 10 million US jobless claims in two weeks. There continue to be shortages of critical medical supplies such as respirator masks and ventilators, as well as lengthy shipping delays.
Authorities have tried to mitigate the fallout by slashing interest rates, ramping up bond purchases, and earmarking billions of dollars to help airlines and other distressed industries, state and local governments, small businesses, healthcare providers, and households.
“There is no magical rebound,” Chambers cautioned. “The federal government, the Fed, central bank, and Treasury did an amazing job in reacting as quickly as they did.”
“Reinvent or be left behind”
The current disruption will cull weaker companies but presents an opportunity for innovators, Chambers told Marketwatch.
“Companies are running out of cash,” he said. “It’s time to reinvent or be left behind.”
Chambers gave the example of Cisco reacting to the bird flu pandemic of 2005 by rolling out TelePresence, a pioneer in videoconferencing products. He also pointed to Shake Shack and Delta Air Lines digitizing their operations, arguing that positioned them well to weather the pandemic.