Long term impact of covid on the economy

[rudged]

Assuming widespread vaccination dramatically reduces the immediate impact of co-vid on our economy, I'm curious about the longer term impacts.

I just saw a recent story that claimed birth rates were down (owing in part to financial uncertainties), which would seem to have a lot of ramifications for education, e.g. lower enrollments in K-12, and later college.

I'm also curious about the effect of a large number of senior citizens passing away -- a lot of inheritances will be made earlier than their heirs might have expected.

[Dicey]

Hmmm, why are you calling it "co-vid"?

[PDXTabs]

I'm currently reading Post Corona by Scott Galloway. He makes a pretty good argument that we've accelerated the business landscape by 10 years. That is, if your business was some traditional retailer on a downward trajectory it just rocketed to the floor. But if your business was an up and coming tech star it rocketed to the moon. Very business focused, but might be worth a read.

[Inaya]

Loss of the older generation is devastating in many ways, but particularly on households that depended on the grandparents for childcare while both parents worked. These families cannot afford childcare nor having one parent stay at home.

Also, many nonprofits depend on retirees to make up the bulk of their volunteer base, especially during normal working hours.

[rudged]

Hmmm, why are you calling it "co-vid"?

Short for "co-vid 19 pandemic"? Is there some political nuance to referring to it as "co-vid" that I should be aware of?

[maizefolk]

It is the hyphenation that looks a little unexpected: co-vid vs covid vs COVID. It was originally an acronym but seems to have turned into a word (like LASER to laser). Co-vid makes it look like there is a main vid and then a co-vid (pilot and co-pilot), or two vids which are co-vids (co-parenting).

About birth rates, they've been dropping substantially in the USA ever since the Great Recession back in 2007/8 which is when the USA fell below replacement, our population would be shrinking if not for immigration. The decline in children working its way through our system is already in middle school (12 year olds go to middle school right?) and will hit colleges in another six years or so. And speaking as someone who works at one, we're not preparing for it. The only mitigation plan I've heard discussed is to out compete other universities for the remaining pool of students.

[OtherJen]

Official standard terminology from the World Health Organization is COVID-19, which abbreviates "coronavirus disease 2019."

[Dicey]

Hmmm, why are you calling it "co-vid"?

Short for "co-vid 19 pandemic"? Is there some political nuance to referring to it as "co-vid" that I should be aware of?

Maizefolk nails it.  It's a usage question, but I find it curious that you're wondering if it's "some political nuance". What???

[JGS1980]

I would not be investing in commercial property right now. Especially retail, but office buildings as well.

[Dicey]

I would not be investing in commercial property right now. Especially retail, but office buildings as well.

Agreed. The shit hasn't even begun to hit the fan.

[chemistk]

So much of the entertainment industry is mortally wounded - and probably will never recover.

Warner Brothers is putting every single major 2021 theatrical release onto HBO Max. Between that, Disney/Disney+, and Netflix, most movie theaters are doomed.

When's the last time bowling seemed like a good idea?

Despite the vaccine, there will be few major concerts - many bands are already filming/releasing 'concerts'.

[bbqbonelesswing]

So much of the entertainment industry is mortally wounded - and probably will never recover.

Warner Brothers is putting every single major 2021 theatrical release onto HBO Max. Between that, Disney/Disney+, and Netflix, most movie theaters are doomed.

When's the last time bowling seemed like a good idea?

Despite the vaccine, there will be few major concerts - many bands are already filming/releasing 'concerts'.

I have to disagree with you there. A virtual concert is nothing like seeing one in person. As soon as folks are allowed to put them together again, we'll see live music take off again.

Movies, on the other hand- I think you're right. Even before covid I hadn't been to a movie theatre much at all in years.

[Kris]

So much of the entertainment industry is mortally wounded - and probably will never recover.

Warner Brothers is putting every single major 2021 theatrical release onto HBO Max. Between that, Disney/Disney+, and Netflix, most movie theaters are doomed.

When's the last time bowling seemed like a good idea?

Despite the vaccine, there will be few major concerts - many bands are already filming/releasing 'concerts'.

I have to disagree with you there. A virtual concert is nothing like seeing one in person. As soon as folks are allowed to put them together again, we'll see live music take off again.

Movies, on the other hand- I think you're right. Even before covid I hadn't been to a movie theatre much at all in years.

True for us on movies, as well. For about a decade, the only time I ever go to movies is if we have a really long streak of beastly hot weather and I just want to be in central air for a couple hours to escape it. (We only have a couple of window units.) I think it has been about 3 1/2 years for me since the last time.

[BudgetSlasher]

So much of the entertainment industry is mortally wounded - and probably will never recover.

Warner Brothers is putting every single major 2021 theatrical release onto HBO Max. Between that, Disney/Disney+, and Netflix, most movie theaters are doomed.

When's the last time bowling seemed like a good idea?

Despite the vaccine, there will be few major concerts - many bands are already filming/releasing 'concerts'.

I have to disagree with you there. A virtual concert is nothing like seeing one in person. As soon as folks are allowed to put them together again, we'll see live music take off again.

Movies, on the other hand- I think you're right. Even before covid I hadn't been to a movie theatre much at all in years.

I agree that concerts will be back, in the short term there will continue to be concerns and disruptions. There were already plenty of ways to consume music with a video component before COVID (music videos, bootleg recordings, and I think there were some official recordings). Concerts where still a thing.

To me it seems like sports is a good analogy. There have been plenty of options to view live sports anywhere you like. Yet, people still chose to fill stadiums or go to a social setting, like a sports bar, to watch.

I agree movies theaters were changing before COVID. This will probably hasten the trend. I haven't paid to be in a movie theater (we did get free vouchers a year or two ago) for about a decade ... Though we did go to several drive-in showing this summer as a change of pace.

I think COVID's long term economic impact will likely be the accelerate or reveal exciting trends; I suspect in 5 or 10 years we will be saying hasten transitions in remote work and online retail, but we won't be saying any last economic change is due solely to COVID.

[By the River]

I would not be investing in commercial property right now. Especially retail, but office buildings as well.

Agreed. The shit hasn't even begun to hit the fan.

I moved out of REITs totally.  (which was only 5% to begin with).  I believe companies are reconsidering how much office space is necessary and love pushing costs down to employees.

[NotJen]

One of my 2020 goals was to watch more movies in theaters.  Ha!  We were doing well at going every other week (on Tuesdays when tickets were $5) - until the first week of March.  I enjoyed watching new releases in the theater, otherwise, many movies just passed me by as I chose not to watch them at home.  Going more often meant that I (hopefully) would see better films than just the blockbuster action movies I saw in previous years.  I do hope theaters can come back eventually.

Plus live concerts, comedy shows, and classes.  These are all things I prioritized in my spending because I value them.  I took a virtual class recently - I didn't like it.  It was nice to do something new, but atmosphere matters to me.

[Just Joe]

I feel like people will resume spending just as soon as their budget allows. In red states spending may have only slowed a little as those governments decided to stay open or partially open per Trump's guidance.

Conversations with our red state relatives (even elderly and cancer survivor among them) revealed that everyone has been in circulation, even going to restaurants over the past several months even as the risks increase beyond what we saw in the spring. That boggles my mind.

[talltexan]

Legit.

I think long-term we're going to see a lot of understanding. Schools will be more understanding of students who missed a year of education. Employers will be more accepting of employees with a gap in their resume.

[GuitarStv]

LASER to laser

As a child of the 90s, I believe that it should be spelled lazer.

[PDXTabs]

It is the hyphenation that looks a little unexpected: co-vid vs covid vs COVID. It was originally an acronym but seems to have turned into a word (like LASER to laser). Co-vid makes it look like there is a main vid and then a co-vid (pilot and co-pilot), or two vids which are co-vids (co-parenting).

Especially since COVID-19 is short for Coronavirus disease 2019.

Co-Vid is like saying Corona-Virusdisease or ma-izefolk.

[Samuel]

Hmmm, why are you calling it "co-vid"?

Short for "co-vid 19 pandemic"? Is there some political nuance to referring to it as "co-vid" that I should be aware of?

Maizefolk nails it.  It's a usage question, but I find it curious that you're wondering if it's "some political nuance". What???

On first reading I actually did wonder if "co-vid" might be some odd coded language used by a specific political subgroup. I've literally never seen it written that way.

[RetiredAt63]

Hmmm, why are you calling it "co-vid"?

Short for "co-vid 19 pandemic"? Is there some political nuance to referring to it as "co-vid" that I should be aware of?

Maizefolk nails it.  It's a usage question, but I find it curious that you're wondering if it's "some political nuance". What???

On first reading I actually did wonder if "co-vid" might be some odd coded language used by a specific political subgroup. I've literally never seen it written that way.

Every time I see it, even though I know it is there, my brain goes "whaaat?"

[HPstache]

Just here to find out what if video collaboration would be good or bad for long term economic prospects ... was severely disappointed.

[iris lily]

I am an outlier who likes going to a movie theater. I like it because it is a cool dark place and there are no distractions. At home I have a bunch of distractions.Also at home I don’t have a big screen,  I watch everything on an iPad.

After retirement and prior to Covid, I had a perfect formula for going to see a film: toney  multiplex in the refined shopping mall in the middle of the afternoon. Joined my gray haired cronies. Those of you who are from St. Louis know which theater set I mean. Quite a refined experience because they show Art House films and the more cerebral of the mainstream releases, and they sell me wine ( which is cheap stuff, but tolerable.) I purposely bought some overpriced crap at the concession counter because I want to place to continue to operate.

But ultimately, I stopped going very often because the film selections  stopped being interesting to me. In the time immediately before Covid I was on a little Jewish film Festival kick that was slightly interesting as a whole, even though the individual films were not especially great.

So in the past few weeks I’ve picked it up here at home and I’m watching my own Jewish film Festival on Netflix.

[iris lily]

Commercial real estate has to be in the toilet. I haven’t looked into it really, but I don’t see how it could be anything but desperate. Even though Residential real estate is going gangbusters, a crazy loon market as we all know.

[Bloop Bloop Reloaded]

The stimulus is very problematic because it, in conjunction with low interest rates, is causing higher asset prices. Great for those who already $3m invested in the share market. Not good for those of us who are young and who were hoping for some bargain basement prices and now are having to pay a premium to buy into the market.

[PDXTabs]

The stimulus is very problematic because it, in conjunction with low interest rates, is causing higher asset prices. Great for those who already $3m invested in the share market. Not good for those of us who are young and who were hoping for some bargain basement prices and now are having to pay a premium to buy into the market.

Clearly that depends on who they hand out the money to. But I would tend to agree that the Fed stimulus (which is very different from the Treasury stimulus) is very accommodation of asset bubbles.

[Bloop Bloop Reloaded]

Stimulus in my view should only be handed out to people to help them pay for vital expenses like shelter, food etc

Middle class stimulus just inflates the economy and assets at the expense of everyone who's prudent with money and has savings.

[CupcakeGuru]

I think there will several minor and major changes to the economy as well as social. Some of the topics discussed with friends are:

movie theatres going downhill
corporate real estate will be reduced
work from home will increase and for some people will be a requirement
people will have more respect/understanding for teachers and daycare
emergency funds become fashionable again
Business work clothes turn into very casual clothes
corporate business travel decreases since people know recognize they can do alot of it virtually
same with training etc
colleges - I don't what will happen with that one
 

[JGS1980]

Stimulus in my view should only be handed out to people to help them pay for vital expenses like shelter, food etc

Middle class stimulus just inflates the economy and assets at the expense of everyone who's prudent with money and has savings.

Smart people have thought about this one already. The trouble with litmus tests for the stimulus payments is that the costs/administrative burden of proving that Family A deserves the stimulus and that Family B does not deserve the stimulus would quickly supersede the actual payments themselves to everyone. Better just to give a little too much and accept some waste. Also, better for the economy, anyway.

[Just Joe]

I suspect if people are spending that much time at home that it will alter how we renovate. I'm not sure home decor is designed for 'round the clock use. I envision worn carpets or engineered wood floors, worn out furniture, etc. Maybe people will go on a quality kick b/c they are tired of everything wearing out. Maybe they'll move their car payment budget into quality home furnishings.

[bbqbonelesswing]

I suspect if people are spending that much time at home that it will alter how we renovate. I'm not sure home decor is designed for 'round the clock use. I envision worn carpets or engineered wood floors, worn out furniture, etc. Maybe people will go on a quality kick b/c they are tired of everything wearing out. Maybe they'll move their car payment budget into quality home furnishings.

I've seen this with a few people we know. If you're going to be stuck inside all the time, you might as well have a nice couch to sit on.

[Metalcat]

Stimulus in my view should only be handed out to people to help them pay for vital expenses like shelter, food etc

Middle class stimulus just inflates the economy and assets at the expense of everyone who's prudent with money and has savings.

Smart people have thought about this one already. The trouble with litmus tests for the stimulus payments is that the costs/administrative burden of proving that Family A deserves the stimulus and that Family B does not deserve the stimulus would quickly supersede the actual payments themselves to everyone. Better just to give a little too much and accept some waste. Also, better for the economy, anyway.

Yep, it's atrociously expensive to administrate who gets money and why.

Also, a big part of the goal was specifically to get people to keep spending so that businesses and jobs could be maintained...thereby keeping people fed.

Cyclical, nor linear.

[PDXTabs]

Stimulus in my view should only be handed out to people to help them pay for vital expenses like shelter, food etc

Middle class stimulus just inflates the economy and assets at the expense of everyone who's prudent with money and has savings.

That's welfare. Welfare == the money that you give to people in need so that they don't stab you to death for a sandwich and a place to sleep.

Stimulus == the money that you spend to keep the economy from deflating more than necessary.

It sounds like you don't like stimulus, which is fine. You can have that viewpoint, others don't want a repeat of the Great Depression.

[partgypsy]

I think people are intensely social animals; and so a lot of things that were shuttered during COVID (going out to eat and drink, music and concerts) as soon as people can do them again, will do them again. There are some things like movie theatres and bowling alleys that, possibly the main demographic is aging and so who knows if all of those will survive but they as a category will still be around. As my Dad was a business owner and was personally involved in his businesses, it does make me feel very sad to see single owner businesses struggling and some have already gone out of business. It was someone's dream and livelihood and part of a neighborhood and it is a loss.

 

[rudged]

Middle class stimulus just inflates the economy and assets at the expense of everyone who's prudent with money and has savings.

IMHO the problem isn't stimulus per se, it's the fact that we have incredibly low interest rates. If you have money to invest, bonds are simply not a viable alternative to stocks.

[John Galt incarnate!]

Assuming widespread vaccination dramatically reduces the immediate impact of co-vid on our economy, I'm curious about the longer term impacts.

I just saw a recent story that claimed birth rates were down (owing in part to financial uncertainties), which would seem to have a lot of ramifications for education, e.g. lower enrollments in K-12, and later college.

I'm also curious about the effect of a large number of senior citizens passing away -- a lot of inheritances will be made earlier than their heirs might have expected.

I think WFH will be increasingly accepted, IMO a desirable and beneficial transition.

"Goodbye commuting."

[PDXTabs]

Middle class stimulus just inflates the economy and assets at the expense of everyone who's prudent with money and has savings.

IMHO the problem isn't stimulus per se, it's the fact that we have incredibly low interest rates. If you have money to invest, bonds are simply not a viable alternative to stocks.

But low rates are a form of monetary stimulus.

[Linea_Norway]

As it turned out that working from home works pretty well technically, I think more people might move away to live in places where they would love to live, instead of living where their job is. So maybe smaller cities and villages will get a new revival with new people moving there, as long as they have a good internet connection.

[PDXTabs]

So maybe smaller cities and villages will get a new revival with new people moving there, as long as they have a good internet connection.

Which pretty soon might be all of them.

[John Galt incarnate!]

As it turn out that working from home works pretty well technically, I think more people might move away to live in places where they would love to live, instead of living where their job is. So maybe smaller cities and villages will get a new revival with new people moving there, as long as they have a good internet connection.

How awful it is to live in a hated locale  because it's where one's job is located  or within acceptable commuting distance.

[rudged]

Middle class stimulus just inflates the economy and assets at the expense of everyone who's prudent with money and has savings.

IMHO the problem isn't stimulus per se, it's the fact that we have incredibly low interest rates. If you have money to invest, bonds are simply not a viable alternative to stocks.

But low rates are a form of monetary stimulus.

True. But this just draws our attention to the fact that not all forms of stimulus are equal. Low interest rates benefit corporations and people who have discretionary money to invest. Direct payments would help those who are poor and/or out of work.

[FINate]

I'm skeptical of overwrought economic predictions. While based on a kernel of truth, many of these over extrapolate. There will be lots of change, but it will be uneven and unpredictable.

Anyone remember in the early 2000s when it was fashionable to predict that all (or most) software engineering would be outsourced offshore, devastating SWE careers in the west? What really ended up happening was the outsourcing of lower-value projects and a huge run up in SWE salaries, a bifurcation of jobs. In today's parlance, a "K-shaped" recovery. 

More recently, dire predictions for VRBOs/Airbnbs at the start of the pandemic. Some have struggled whereas others have thrived, mostly based on migration and changing preferences.

Costco and Walmart (maybe Target?) will emerge stronger. Run of the mill chain stores that were already in trouble before the pandemic are in even deeper trouble. Yet retail at large is not going away. Many people, maybe not MMMers, still value places that can provide a unique retail experience. Well run boutiques in hip urban cores that were doing well pre-pandemic should mostly emerge on the other side okay. Struggling mom and pop stores in less desirable locations, well, most of these probably already shuttered.

Restaurants, bars, coffee shops, etc., will mostly bounce back since people (even this introvert) are eager to get out and socialize again. But again, this will be localized. Places that have lost office workers and/or residents will have to adjust down to a new level of demand whereas growing areas will adjust up.

Office space is a puzzle. Sure, remote work may continue for the long term. But many workers crave at least part time face to face interaction. My guess is this will be more of a hybrid approach, with perhaps reduced demand for office space in certain areas, but an increase in other areas if mega corps decide to open satellite offices for clusters of remote workers in/near smaller cities.

My biggest concern: The huge backlog of unpaid rent (retail and residential)... not clear how this gets processed through the system without causing indigestion.