First, travel from China to the US was halted. Then schools closed. Then some businesses went 100% remote. Yesterday, travel from Europe to the U.S. was halted. Then the NBA cancelled the rest of its season and the NCAA Basketball tournament announced they’d play without fans at the games. Still, the coronavirus spreads, infects, and causes death at a rate 10X that of the flu. On the surface, it’s easy to say, “Some people will get sick, some will die,” but that’s just the most obvious impact. The Corona Effect will be a slow roll and will look and feel a lot like previous economic disasters.
What to Look For
First, the health concerns. Read a lot of stuff, and focus on people who are actually economic and pandemic experts. That will prevent you from the CNN/FoxNews meltdown, because it is not the end of the world, despite “BREAKING BOMBSHELL” news every hour from the media. It’s not the end of the world, but a lot of things are going to change.
I’m not smart enough to predict the long term global thermonuclear economical trends that will come from this pandemic, but I can confidently say what will happen close to home. And, when something happens “close to home” for all of us, that means it’s global. Here are a few of the things we should all just take into consideration for the next 6 months or so.
Gatherings – wherever people gather for an event, now they won’t. Basketball games, weddings, parties, bar mitzvahs, conferences, meetings, airplanes, cruises, airports, restaurants, churches will all be a lot emptier than before. Not totally empty, because some people will still go, but like this shot from a colleague traveling by air to a meeting today (12 March), most gathering places will be close to empty.
If the gathering can be done over the internet, some form of it probably will be. This Friday, we’ll be trying Pitch Practice completely online. Join us if you like. No idea how it will turn out, but it’ll be fun, and we will learn something new about ourselves and what we’re capable of.
The Economic Ripple Effect
What does all this mean? First, every vendor that serves food & beverages at any venue the NBA uses and Atlanta’s Mercedes Benz Stadium will instantly take a hit because they won’t be working that gig, or any other large crowd event in the next few months until the Corona Effect is over.
And it will come to an end. We just don’t know when yet, or what will change, temporarily or permanently.
Next, all the restaurant workers will go without tips, which means going without income, for some unknown period of time. Also, since we’re not flying, the airlines, who are always very economically vulnerable, will drop like flies. Clark Howard said this morning on the radio that flight reservations have dropped 70%. That’s a death knell for any airline that doesn’t have a long term cash reserve to survive such a downturn. That means some of their employees will be laid off.
The cruise industry is going to suffer greatly. You have most governments telling their citizens, “DO NOT get on a cruise ship!” That’s a tough one, but it has a ripple effect: ports shut down, cruise workers get laid off, cruise food & beverage and service vendors take a hit.
The corona effect is one huge ripple.
We’ve Been Here Before
I was there in 1987 when the stock market crashed. Then I lived through 1999 and the dot com crash. I was there in 2008 for the financial meltdown. Now we’re here today about to experience the corona effect.
But keep in mind that, after each of those crises, major new economic factors came into being. After the 1999 dot com bubble burst, the reality that the internet is a money making machine changed the world. Hello Amazon and Netflix, among many, many others. Salesforce was born in 1999!
The 2008 financial meltdown gave birth to the entire “gig economy”: Airbnb, Uber, Lyft, and hundreds of other companies now enable anyone to “sign up and make money” with your car, house, rental home, or other shareable asset. What’s next?
A Positive Corona Effect?
What will the positive economic impact of the corona effect be? Here are a few things that will prosper.
Amazon – I predict that the corona effect will include the complete and final death of retail shopping. Why go out to a store when Amazon can deliver just about anything – including Amazon’s own brand of toilet paper – tomorrow?
A short digression: I read a short post on Twitter this morning about a lady who was walking into a grocery store and an older couple called to her for help. They weren’t injured or anything, but they were both in tears and distress because the coronavirus is far more deadly to people over 70 or 80 than to any other age demographic. They were scared to go into the grocery store, so they waited for someone who looked trustworthy enough to ask for help. This young lady did the older couple’s grocery shopping for them, gave them their change back, put the groceries in the trunk, and sent the couple home in peace.
The lesson? Coronavirus is lethal for people over 80, and very much dangerous for people over 60. Those people should stay home, but how do they manage? They need help.
Home Delivery Will Thrive
Enter the gig economy. Grocery delivery, home services, food delivery, and other “pay someone else to do it” services are going to thrive, at least in the short term. Restaurants would do well to remember this and figure out how to make due by becoming a short order catering company.
Anyone who can work from home will work from home. That means your home internet better be rock solid. Tools like zoom, Google Hangouts, Slack, and your cell phone will double or triple or more in daily and weekly usage. Gas purchases will plummet because people won’t be commuting, so the oil wars that just started will drive gas prices even lower, which will cause some gas & oil companies to default because they’ve been borrowing billions to take advantage of the shale in TX and ND. So oil & gas companies will lay off people, and electric cars will become even more popular, despite gas prices going down below $2/gallon. Advantage: Tesla.
Closer to home, we (I say “we”, but am speaking for myself) will stop or very much slow our restaurant visits, but will likely still go through drive through lines. Any grocery store that cam mimic the Chick-Fil-A mobile ordering and pickup process will likely be almost as popular as Amazon, but since it’s really hard for organizations like that to change, we will likely see retail stores close or consolidate and then close.
Clothing stores are done. Period. Are you really going to to into a store and put on clothing that someone else may have tried on? Nope, better to order 3 sizes from amazon and send back the two that don’t fit.
Basically, if your business delivers anything to homes, you should see an uptick in business now. Not sure if it’ll last, but there’s opportunity now.
Prepare for The Corona Effect
And now’s the time to make the transition to what will be the Corona Economy. Everyone should consider doing these things:
- If you are a healthcare worker, or you know someone who is, God Bless You. Stay safe, get rest. For the rest of us, pray for and be very kind to anyone on the healthcare front lines. What a horrible time they are having and will have. Who will create a long-distance coronavirus test?
- Learn to work from home as a team (follow these guidelines for starters) and as an individual. It’s different!
- Make sure you have Amazon Prime – free 2-day delivery and movies. Yes, and Netflix, too.
- Check on your home internet service; make sure AT&T doesn’t throttle you after you use it all up.
- Look for elderly people to help, and check on them regularly.
- When you do go out to a restaurant, TIP REALLY WELL!
- Wash your hands over and over and over and over and over.
- Prepare for an economic downturn; might be short, might be long.
- Start a garden – ever notice how people touch lots of fruit and vegetables before they put them in the bag?
- Learn to make your own hand-sanitizer
- If you’ve got kids, help them learn how to go to school online. Emory University is moving all their classes online. Totally different learning – and teaching! – experience. Georgia Tech was one of the first schools to offer a complete degree online a few years back, and it’s WAY cheaper than going in person, but again, totally different experience.
- Please do not hoard. Saw one of those videos earlier of a lady who had – not a typo – a dozen of those 12-packs of toilet paper in her grocery cart. Another lady just wanted one of them, and the hoarder wouldn’t relent. Be kind, people.
We’re Still People
Above all of this, despite the corona effect, we are all people, and people need social interaction. We’ve learned the hard way that “social media” is NOT real social interaction. It’s fake. So we need to figure out a way to socialize in the short term without spreading this virus. FaceTime, Zoom, Google Hangouts, and other video chat services are going to get very busy for the next few months.
And, most of all, be kind. I say this a lot: people are stupid. I don’t mean that personally, but just like any group of Frat boys is way more likely to do something stupid than any one of them on their own, society can quickly move into meltdown mode. It only takes one of you to be kind, like the young lady who helped the elderly couple get groceries. They are not likely to forget that act of kindness anytime soon.
This, too, shall pass
Let’s all remain calm, and work towards a positive corona effect. It will come to an end, that I can promise you. When it does, the world – and the local economy – may change permanently. It did after 1987, 1999, and 2008, just like it did after 1929. Things changed, and we adapted. We can do the same in this current crisis. The corona effect can be positive in the long term, despite short term confusion, problems, illnesses, and fatalities.
Wash your hands, be kind, stay home if you feel sick, and love on people a little extra (without touching them). =)