Covid-19 Economic Impact

[catch22]

I think we will see a recovery kind of like this. Once states start opening up retail and restaurants you will see people immediately going back to work. But, a lot of retailers and restaurants won't survive, so I think it will initially bounce back quick to about 1/3 of the initial drop, and then take a few years to dig out of the remaining hole. Full disclosure, I have no training or education in this field and it is not supported by any data, just my own opinion.

[mkjeeves]

I think we will see a recovery kind of like this. Once states start opening up retail and restaurants you will see people immediately going back to work. But, a lot of retailers and restaurants won't survive, so I think it will initially bounce back quick to about 1/3 of the initial drop, and then take a few years to dig out of the remaining hole. Full disclosure, I have no training or education in this field and it is not supported by any data, just my own opinion.

I don’t know if it’s realistic, but I hope the same!

[Edmond Hausfrau]

Mercy has announced furloughs across 4 states, including Oklahoma.
Healthcare is getting slammed in all directions by this pandemic.

[mugofbeer]

I think we will see a recovery kind of like this. Once states start opening up retail and restaurants you will see people immediately going back to work. But, a lot of retailers and restaurants won't survive, so I think it will initially bounce back quick to about 1/3 of the initial drop, and then take a few years to dig out of the remaining hole. Full disclosure, I have no training or education in this field and it is not supported by any data, just my own opinion.

I tend to feel even a bit more optimistic. Yes, some businesses will close but as always happens, new ones will open to replace them and new entrepreneurs will emerge.

[Pete]

Mercy has announced furloughs across 4 states, including Oklahoma.
Healthcare is getting slammed in all directions by this pandemic.

Along with virtually everything else outside maybe grocery stores.

The long-term domino effect of this will go on for years, even in the best-case scenario.

[mugofbeer]

Along with virtually everything else outside maybe grocery stores.

The long-term domino effect of this will go on for years, even in the best-case scenario.

And pet supplies, mail order, general merchandise discounters, appliance retailers, hardware and retail building supplies, banking and financial services (my old employer is hiring 500 here in Denver), and many more.

The economy is most certainly damaged but is not as desperately bad as many think. It will improve rapidly once it's seen if a 2nd wave does not happen.

[Pete]

And pet supplies, mail order, general merchandise discounters, appliance retailers, hardware and retail building supplies, banking and financial services (my old employer is hiring 500 here in Denver), and many more.

I would be willing to bet almost all the companies in those categories are experiencing a downtown and that will continue for some time. Some are seeing a bit of an uptick but all have huge expenses due to the virus.

Even the earnings for Amazon are down.

[Isaac C. Parker]

Even the earnings for Amazon are down.

Amazon had to (unexpectedly) shell out $4 billion this quarter on COVID-19 safety measures and hiring new employees. That may or may not be a recurring expense sometime in the future.

Their revenue still beat expectations, but their EPS did not.

Online ordering is way up on the platform as well. The impact on AWS remains to be seen.

[EBAH]

Amazon had to (unexpectedly) shell out $4 billion this quarter on COVID-19 safety measures and hiring new employees. That may or may not be a recurring expense sometime in the future.

Their revenue still beat expectations, but their EPS did not.

Online ordering is way up on the platform as well. The impact on AWS remains to be seen.

Yeah I mean people seem to forget the profit margin of the retail side of Amazon is like 2-3% on average. AWS is by far where they make their money. I think most folks think, Amazon must be making a killing, but with huge supply side confusion and delays, huge outlays for employee safety and a lot of logistics changes, they may be losing quite a bit right now.

[Teo9969]

I'm no economist, so I can't sit here and lay out an academically rigorous argument for this but here's how I see it:

Prior to Covid, the supply chain across the entire global economy was as strong as it's ever been and very much responsible for the velocity of our global economic gains over the last 10 years...in fact likely one of the things that helped us rebound quickly from the Great Recession.

That supply chain has to have been essentially obliterated. If Company A produces for Company X and Company B produces for Company Y, it's not like we just wiped out a single level of supply chain. Company A and Y may have gone under but Company B and X survived. Now they have to find each other in the market and come to terms with how to do business with one another. All of that takes time and the beginning of business relationships is almost always the most disjointed.

To this end, the more localized the supply chain, the easier the recovery, the more global the supply chain, the harder the recovery. So I think restaurants can come and go pretty easily because so much food supply is local and menus can be changed relatively easily. But anything that is manufactured or depends on manufactured products is likely going to be in disarray for a long time.

And then of course there are so many ramifications for other industries. I was talking to my Aunt who works for a title company and they're of course getting absolutely slammed. But their company came out and basically said "Your job is safe through the Q2, but after that we will reevaluate". After that industry works through the incredible backlog of refinances, they're going to be left with basically just purchases which are most surely going to go down as economic conditions worsen and more people are left without a job to qualify for a mortgage (and of course, higher lending standards than ever). To compound, with all the refinances coming through the pipeline at once, that segment of their workload won't likely come back in any volume for a long time to come, as people are not going to be trying to get out of a <4% rate and if they are, it's because the entire system is either collapsed or mutated into something completely different.

To me global interconnectedness *is* the economy and is going to take, at a minimum, north of 6 months just to get its bearings from the fallout, then another 24 to 48 months to regain the efficiency it previously had. And it won't be a smooth line up but rather very volatile. Of course, it may be beyond repair, and I think that urgency is why states are opening up end of April, mid-May, because state/federal leaders are communicating with their business lobbies and those lobbies are painting a grim picture.

The only reason the economy is moving forward is because it is being prioritized by political leaders in this country over gaining a better control of the virus.

[Bunty]

As a layman, I think a successful reopening of the economy will most depend on hospitals not being overwhelmed by new patients as restrictions let up from phase to phase. Possibly this can be accomplished by older people, especially those with pre-existing health conditions, continue to stay at home and away from positive people. Maintaining social distancing with easier and faster testing will also help. Mask wearing when close services are involved, such as getting a haircut should be encouraged. Hopefully, the people can eventually prove those pessimistic health experts as WRONG! There, could be an increase in positive cases, but it doesn't have to mean cases overwhelming hospitals.

[Edmond Hausfrau]

As a layman, I think a successful reopening of the economy will most depend on hospitals not being overwhelmed by new patients as restrictions let up from phase to phase. Possibly this can be accomplished by older people, especially those with pre-existing health conditions, continue to stay at home and away from positive people. Maintaining social distancing with easier and faster testing will also help. Mask wearing when close services are involved, such as getting a haircut should be encouraged. Hopefully, the people can eventually prove those pessimistic health experts as WRONG! There, could be an increase in positive cases, but it doesn't have to mean cases overwhelming hospitals.

Older persons may be social distancing and staying away, and one of the brewing tragedies may be how many are having unwitnessed strokes.
https://utswmed.org/medblog/covid19-...lume-decrease/

[gopokes88]

Hospitals are literally closing their doors because of a lack of business, we're so far away from overwhelming them. Those overwhelm predictions were based on data and hospitalization rates that were grossly overstated.

[EastCoastGator]

I know, right?!?! I was thinking of the same thing. Close down all business and social distance for 2 years (by some "experts" estimations), all to not overwhelm the hospitals. And here we are with under 200 people in the hospital for Covid-19, and we're laying off workers in that industry. Talk about irony. It's amazing that certain people can't see the reality of the situation, they can only see Don Lemon's ugly grill spouting off the "grim" death toll on CNN.

[HangryHippo]

Those overwhelm predictions were based on data and hospitalization rates that were grossly overstated.

You do understand that there were actions taken that impacted hospitalization rates causing them to be overestimates, right?

[Ronnie Jackson]

You do understand that there were actions taken that impacted hospitalization rates causing them to be overestimates, right?

Most of the estimates factored in social distancing and other measures. It is okay to admit the forecasters got this one wrong.

[mugofbeer]

I know, right?!?! I was thinking of the same thing. Close down all business and social distance for 2 years (by some "experts" estimations), all to not overwhelm the hospitals. And here we are with under 200 people in the hospital for Covid-19, and we're laying off workers in that industry. Talk about irony. It's amazing that certain people can't see the reality of the situation, they can only see Don Lemon's ugly grill spouting off the "grim" death toll on CNN.

The media still is insistent on just giving the total cases numbers when they give their COVID stats. Of course total cases are going to go up and the rate may, in fact, be increasing due to better and more testing virtually everywhere. I won't go over my belief's for the reasons on this thread but it's horribly misleading because, as has been stated on here and the other COVID threads, it's current numbers of hospitalizations and deaths that matter and then a running average of the growth or declination rates.

[HangryHippo]

Most of the estimates factored in social distancing and other measures. It is okay to admit the forecasters got this one wrong.

Many models don't include them until the measures are put into place, at which time estimates are revised.

[jn1780]

The media still is insistent on just giving the total cases numbers when they give their COVID stats. Of course total cases are going to go up and the rate may, in fact, be increasing due to better and more testing virtually everywhere. I won't go over my belief's for the reasons on this thread but it's horribly misleading because, as has been stated on here and the other COVID threads, it's current numbers of hospitalizations and deaths that matter and then a running average of the growth or declination rates.

Doctors have also learned since the early days of this crisis that ventilators are pretty worthless, statistically speaking. 85% of patients that are put on a ventilator die. They have fine tuned their oxygen treatment protocols and treating vents as more of a hail Mary attempt.

[AP]

https://freepressokc.com/over-400-ev...courts-monday/

Over 400 petitions for eviction were filed in the Oklahoma County Court system on Monday alone.

Public officials in Oklahoma County and Oklahoma City government are concerned. They see the large number as an ominous sign that there could be a flood of evictions in a month or two.

[gopokes88]

https://freepressokc.com/over-400-ev...courts-monday/

yeah no sh*t, its not like 30 million were unemployed overnight. Why do bureaucrats always sound so surprised at the results of things they do

[Pete]

I simply can't believe the stock market isn't way, way down.

I don't think people have come to terms with the economic realities we are facing. This will take years to dig out of.

Besides no businesses making money, everyone I know (including me) is drastically reducing their spending.

[jn1780]

I simply can't believe the stock market isn't way, way down.

I don't think people have come to terms with the economic realities we are facing. This will take years to dig out of.

Besides no businesses making money, everyone I know (including me) is drastically reducing their spending.

I can. Ever since 2008 the stock market has been disconnected from reality. All that money the Fed "prints" ends up somewhere. It just doesn't make it to the mainstream economy.

The month of April wasn't pretty for the Federal budget.
https://fiscal.treasury.gov/files/re...ts/mts0420.pdf

[HangryHippo]

I can. Ever since 2008 the stock market has been disconnected from reality. All that money the Fed "prints" ends up somewhere. It just doesn't make it to the mainstream economy.

The month of April wasn't pretty for the Federal budget.
https://fiscal.treasury.gov/files/re...ts/mts0420.pdf

Of course not. When you give it all to the rich to make them richer, why would the market tank?

[Teo9969]

I simply can't believe the stock market isn't way, way down.

I don't think people have come to terms with the economic realities we are facing. This will take years to dig out of.

Besides no businesses making money, everyone I know (including me) is drastically reducing their spending.

Reduced competition. A hypothetical example:

Poo Pourri - <200 EE Company with a great brand: Likely going to lose some quality talent. Going to have to expend time & resources to improve liquidity likely taking on new debt and reducing margin. Likely lost suppliers or distributors who went under and have to go work new deals that will take time to get up and running. Going to have to abandon expansion into new markets and may have to roll back in markets they were just beginning to get a foothold.

Glade - "Subsidiary" (I think it's just a brand) of SC Johnson: No real cash flow issues. Suppliers/Distributors are either also going strong or relatively easily replaced as many suppliers/distributors will line up at the door to work with SC Johnson. Already in just about every market and will likely pick up market share with zero dollars as companies like Poo Pourri leave market or go under. Has an excuse to trim fat and get rid of underperforming employees.

Stock Market is doing well for the same reason Paycom's market cap shot up over the last 3 to 5 years without the revenues to truly bolster that valuation: Forecasting the wins. Most publicly traded companies are not being absolutely rocked by this. Sure, revenue is going to be down, and profitability will take a hit, but investors are rightly assuming that we will get out of this eventually. And when we do emerge, the landscape is a feast for these larger companies and a land-mine for small business. Especially in an economy that just wants cheap.