[part 2]
This will get worse before it gets better. Maybe the summer heat will deter contagion. Our doctor friends are hoping for this. I’m also hoping that we’re cleaner (aren’t Americans obsessed with hand sanitizer?). We also have the advantage of knowing what is coming (by watching China, Italy, South Korea). We might be dumb enough to ignore the lessons learned there, but at least there’s some guidance from things that worked and did not work. The lockdown in China may have worked for now. That and additional care / knowledge of what is going on.
Medical facilities will become overwhelmed crowding out other ailments. Our doctor friends all agree on this. Don’t break your leg anytime soon – you’ll be in the ER with 100 other coronavirus patients. Get your teeth cleaned asap, as you won’t want to get that close to *anyone* in a few weeks.
Schools? Some might close. This virus appears to be weird in that kids don’t seem to be affected by it. But they are probably big-time carriers of it. My kid constantly spits on me when he talks – I think I’m doomed if he gets it, I’ll have to wear my welding mask around the house!
Stock market will continue to decline big time. In 2000, the market dropped 78%. In 2009, the market dropped 50%. Right now, it’s dropped about 20% from what many considered to be a peaky bubble. At first glance, this corona virus outbreak is going to be much worse than anything we’ve seen before. After 9/11, airline revenue dropped 7% and numerous airlines took a big hit. For this outbreak, they are predicting revenue drops of 23% right now. I think the CEO of United mentioned that if that size of a drop happens, then United will have to declare BK by the end of the year. No ****, that’s serious.
Election – In this situation, the Trump administration can’t win and will be criticized if successful or not. If they succeed in keeping the virus at bay, the Dems will say they spent too much. If the virus spreads everywhere, it will be Trump’s fault. The CDC has fumbled the ball once already, but it appears they might have control of it now. Who knows, too soon to tell. On the other hand, if the **** hits the fan, we may see a rallying effect like GWB saw after 9/11 but I’m not sure. One thing you can bet on – the media will spin and use every opportunity to bash the Trump administration.
Vacations- like 2009, look for people to go on “staycations” with immediate family. Big drop in airline travel. RV rental and sales will be big. Cruise line traffic will be down 50% (it probably already is – even Pence is saying “don’t go on a cruise right now.” That’s really bad for business.). There will be a lot of people in the national parks this summer.
Work from home will accelerate and perhaps offices will never recover. We work - done for. I never liked the concept of “sharing germs with other people in a co-working space”. Now, this just won’t happen. Shared offices? Not likely. The office market has been on a decline for a long time now, look to see this accelerate it. Home video apps and tools will do well of course. More people will work from home and like it, and will not want to return to the office.
Health clubs – will be quiet, although some people are just addicted to working out. Bicycle sales might increase as people head outdoors more. Here in LA you can do that, but you can’t bike in the winter in NY. Still, I can’t think of a more germy place than a health club. I actually get a little nauseous just thinking about it.
Churches - big problem. This is how it spread in South Korea, probably Iran, and New Rochelle. Religious people don’t want to give up their services. Even the Iran imams disobeyed the ayatollah and kept licking the statues. This one is going to be tough to give up. Meeting in church on Sunday may be difficult for people to give up.
Hand sanitizer and masks will continue to be in demand. No brainer there.
This will be a Big hit to economy and will cause a recession if it hasn’t already. No way this can’t happen at this point. It’s not like I would be predicting anything, it’s already here, right now. All one needs to do is look inside a restaurant or the airport. This one will go down in the history books right next to the dot-com crash, 9/11, the financial crisis of 2009, and the big market crash of 1987. If one wants to see what would happen, we could look to the flu pandemic of 1918 and the economic consequences of that (see this study here:
https://www.stlouisfed.org/~/media/files/pdfs/community-development/research-reports/pandemic_flu_report.pdf)
The report mentions some things (from 1918):
How Influenza Affects Business.” The Arkansas Gazette, Oct. 19, 1918, page 4.
- Merchants in Little Rock say their business has declined 40 percent. Others estimate the decrease at 70 percent.
- The retail grocery business has been reduced by one-third.
- One department store, which has a business of $15,000 daily ($200,265 in 2006 dollars), is not doing more than half that.
- Bed rest is emphasized in the treatment of influenza. As a result, there has been an increase in demand for beds, mattresses and springs.
- Little Rock businesses are losing $10,000 a day on average ($133,500 in 2006 dollars). This is actual loss, not a decrease in business that may be covered by an increase in sales when the quarantine order is over. Certain items cannot be sold later.
- The only business in Little Rock in which there has been an increase in activity is the drug store
Conclusion? I don’t think it will be as bad as the most dire predictions (10 million dead), but the major damage will be economic.
-Wayne