1. Essential+Unaffected: demand will be steady because there is no other choice, i.e. food, communication, ecommerce.
2. Horribly Affected: maybe even illegal to open right now, and when they open demand will be down significantly i.e. restaurants, bars, live entertainment, travel, some segments of education like language schools that cater to international, conferences and trade shows. Maybe back to full strength in 2 years but not going to be fun for a while, huge hit to demand.
3. Affected proportional to total global economy: If the overall economic activity goes down 20%, some businesses are going to track that. Transportation, business services, maybe banking.
The governments of the world certainly have the ability to stimulate asset bubbles, but I'm not sure that they can generally stimulate business activity other than on the demand side, i.e. rising incomes for labor. I think there could be a stratification of national economies performance over the next 2 years based on the ultimate success of their COVID-19 response. I'm seriously considering if I should try to predict the most robust regional response and look at moving there post crisis for the next 2 years or so. I think there could be significant differences. Not necessarily who is suffering the least, but who is going to emerge most vigorously.
Same...always better to thrive than to survive and we all get to choose :)
I have a friend who owns a factory in a very unsexy niche industry (packaging). They're relishing this crisis, because they manage the business very conservatively in terms of cash flow and leverage, and are expecting many of their competitors to go bankrupt in the near future. When the dust settles, they'll be one of the few left over, which means they can charge much higher rates. This'll likely be the story in many industries.
Rich monopolies like Google and Facebook are going to do fine. (And note that both of them are still hiring, meaning they can potentially clean out the supply of engineers while many of the newer growth unicorns have instituted hiring freezes.) Marginal players in competitive industries are going to get killed.
Both of those are primarily dependent on ads for revenue and ad spending is already dropping precipitously, as far as I've heard?
A contraction of 20% only puts us nominally back less than a decade. People didn't have to be sacrificed back then, and they don't today.
There are interventions we do need, but if everyone took a 20% hit as a group instead of a de facto Hunger Games, it wouldn't be nearly as ghastly.
Off topic, but that is a brilliant framing. I'm going to steal and use that repeatedly.
There aren’t going to be any large gatherings or sporting events for the foreseeable future, lots of people are starting to wear masks and are doing much better as far as hygiene and social distancing are concerned. Why _can’t_ we start to think about getting things to slowly go back to normal? Keep the elderly (way easier for them to quarantine) and sick at home. If you can work from home, continue to do so. Everything else, figure out how to make it work within the framework of social distancing. There has to be more than a choice between “total lockdown” or “everyone’s gonna die.”
Why do you think that is? Because the stay-at-home orders worked. NY is the worst case scenario and you want to stop things before they get that bad.
If we had a magic dial for precisely tuning social distancing measures to cause minimum economic harm and death, we'd use it. Since we don't we have to err on one side or the other. So far we've erred on the side of caution, accepting short-term economic damage. As things get less crazy these measures will be gradually scaled back. It doesn't mean they were never necessary.
Y2K is going to be a big deal if we don't do anything about it. We do something about it. People complain Y2K wasn't a big deal.
That, like this, means we're doing things right. Maybe we're going a little extreme, but the alternative is likely worse, and there is never a magic dial to spend just the right amount of effort/money/time.
It's unfortunate that it's so easy to find preparation wasteful when it ends up not being necessary. But, we all have different life experiences.
To be fair, though I agree with you in general, NY-- esp NYC-- is much more dense than the rest of the country and as a result R(effective) may have been much higher there than other places. It may be the case that much stronger measures were needed there then in many other places.
So while it is true that part of the reason other places are less bad is because the policies worked, differences between the locations may also play a significant role.
The interior of the country doesn’t have the infrastructure to support exponential growth. Nurses and doctors and hospitals being idle is a sign that we chose the SF path, not the NY path.
The economic impact is of course absolutely terrible and this is shaping up to potentially be as bad as the Great Depression was. But letting the virus ravage small towns and cities without adequate support would be worse both economically and in terms of loss of life.
Regions hardest hit by COVID-19 seem (informal take) to have largely been large, dense, sprawling cities. with poor public health infrastructure or responses.
In the US, it's currently mostly Northeast cities, generally surrounding New York, doing the worst. Wuhan (11 million) is also huge. Milan (Italy), Madrid (Spain), Tehran (Iran), London (UK) have also fared poorly, especially relative to their countries.
Outbreaks in less populated regions can and do occur. -- though often within institutional populations or equivalents -- cruise ships, retirement / nursing homes, prisons and jails, as well as anti-science religious groups, notably.
And not all megacities have been hit, especially those with solid monitoring systems, response plans, and infrastructure: Hong Kong, Seoul, Taipei, Singapore, especially.
But this is a pattern to watch going forward.
Developing nation megacities seem at high risk.
Unfortunately, both options are not mutually exclusive
Now we know the virus is not quite as deadly as anticipated (around 2%). And we know the economic impact is disastrous (+15% unemployment in the US after 3 weeks). So the strategy will have to be re-evaluated eventually.
My opinion is that politicians taking the decisions are too remote from people experiencing economic hardship, so they will let the economy get much much worse for way too long.
The only thing that might matter more broadly than prosperity/poverty is life and health.
https://en.m.wikipedia.org/wiki/Hooverville
Oh, then the lagging indicator which are deaths of despair will surely be worth it: https://www.npr.org/2020/03/18/817687042/deaths-of-despair-e...
By delaying the formal response it would have been possible to get most of of the economic harm of distancing while only getting a small part of the benefit.
Many people started distancing in the couple weeks before the shelter in place orders started. I know people that quit jobs to get away from the public, etc.
Yet many of those people who were increasing their distance, lowering their economic activities, etc. were also living with others who were in denial about the pandemic and where nothing short of a vague threat of citation/arrest or a closure of their hangouts would cause them to reduce their interaction... at least until people they know started dying, which would be too late for intervention (yet at that point they'd still drop out of economy!). In a "no order" world, you'd still get most of the economic hit of that household shutting down-- but they might often still get the infection, contribute load on the hospitals, and potentially die because one member of the household was less responsive to common sense.
Various legal and economic mitigations would also be less likely to exist absent an official response.