Originally Posted by sebastian_dangerfield
That's an excellent thread, and his first three counter-arguments are well made. The fourth, however, is too dependent on restaurant stats.
Restaurants are perhaps the most discretionary consumer choice out there. Some considered a luxury. It's not surprising consumers would pull back from that purchase in the face of a possible pandemic. They're also a leading indicator of consumer sentiment, and that sentiment wasn't exactly robust before the emergence of Covid-19. One of the first elective expenditures people drop in a recession are restaurant purchases.
A better example would be nail and hair salons, which many women do not view as discretionary spending. I've heard a black market for home delivery of these services has sprung up in our area. I'd bet if allowed to continue, those businesses would have seen a decrease in revenue, but would continue to enjoy a steady flow of customers. The same would apply to non-essential medical procedures like dermatology, plastic surgery, orthodontics. Those offices would likely have continued to see a decreased but significant revenue stream.
Golf courses around here have been raided by police because members have been informally playing (walking, no carts) rounds. Same with outdoor tennis facilities.
Liquor stores in New Jersey are enjoying a huge windfall because PA's stores are closed. People are waiting in lines, in cramped spaces, to buy in mass quantities.
If you need to see an eye doctor because something is compromising your vision, you're going to see that doctor.
I know from firsthand experience that people will continue to purchase non-essential health services right through the teeth of a pandemic. They didn't even stop doing so after the governor's order. This was why our governor issued a scary follow-up order in which he said he'd shut down non-essential health care providers using police. Many nevertheless persisted even after that. Finally, the governor did two things. First, he issued a shelter in place decree, which gave consumers significant pause. Second, they ordered that to provide any kind of care, health care providers would have to use a form of water and air filtration none of them could possibly have, and wear PPE the state knew none of them could acquire. That scared employees and made the exercise of trying to remain open entirely cost prohibitive.
If Trump says "We're open for business" on May 1, there are three forms of consumer response:
1. Balls out. "Let's do everything just like before!" This will be a low information consumer, probably 35% of people.
2. Cautious. "Let's wait a couple weeks and see if it's safe." This is probably 40% of people. They'll start consuming, but only in order of necessity first, putting things like restaurant purchases or movies at bottom of list.
3. Scared. "I'm not going near anyone." This is another stripe of low information consumer. Neurotic. This is the temporary hole in the economy we'll have going forward. Will only emerge from cocoon via peer pressure over several months. But this person will resume normal activities eventually, as FOMO and the human biological urge to follow and be with others will be overwhelming.
I see tremendous pent up demand being unleashed in summer if this thing peaks and fades a bit by early May. Keep in mind -- in past pandemics, people did not have social media. They didn't know the town down the road, where the virus had not been as severe, was open and people were enjoying themselves in cafes. Now, the shut-ins will see their friends having a blast on Instagram and Facebook. The pull to resume normal activities will be like crack. And shit will be really cheap for a while, just like after 2008.
I see many reasons to be depressed about the next few months, but I also see huge potential upside. Particularly if that malaria + z pak therapy (or some other one) gives a clear method by which to keep people off ventilators.
|
