What happens after the epidemic?

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We are in the thick of it, and I think we will be until August. My brother thinks the East Coast will be done by August, where as the Red states (who are lagging) will get hit hard in August and not be done until December. (For now I am ignoring the possibility of the dreaded "second wave"). But the point is, at some point the Covid19 pandemic will be done and we will be faced with the aftermath.

- There will be economic devastation from the months the economy has been shut down. This devastation will be unequal. People in the service sector will be hit harder than people in other industries. Doctors, lawyers and engineers will have it better.

- There will almost certainly be some kind of recession. The unemployment will be high.

- There may be inflation (or in this case "stagflation"). This would be a horrible outcome.

- I don't know how long the recession will last. Part of me argues for a fairly quick recovery based on pent up demand, and established production channels. Many people may be able to go back to the jobs they had before the pandemic.

- I fear (and strongly oppose) the imposition of wage/price controls. This was last done by Richard Nixon to control inflation while he was worried about unemployment.

Any thoughts on this? What do you think the country will look like 6 months after the epidemic is declared over?

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[+3] - McGentrix - 04/06/2020I don't think it will be as dire as great depression times. I think there may be some blow back against the big corps and local business will become local again. People will want to keep their...

@maxdancona,

Hope you can tolerate a personal and and vaguely related anecdote.

My first thought came when you mentioned Nixon's price controls. I was a machinist at the time, and 1 1/4 bar stock was unavailable with the controlled price. Non standard dimensions were outside the controls and thus not price controls. We got bar stock 1/16" oversize and turned it down to 1 1/4'. It was an expensive process.

The company was real good at holding the line on wages, though.

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@roger,

ll be able to get a decent haircut.

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@farmerman,

For the first time ever.

(Sorry, but you can't give me a line like that and not expect me to do something with it.)

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@izzythepush,

Id stick with my day job, after all," second to having comedic talent is an appreciation of those who really have it"

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@farmerman,

Thank you.

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@izzythepush,

Im here for ya

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@farmerman,

I appreciate it.

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@farmerman,

After the Black Death feudalism in England collapsed, so it doesn't necessarily follow that things will be worse economically once the pandemic is over.

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- I am guessing that a lot of business will cease to exist. Going three months without any income is more than many businesses can take.

- I think many small retail and service businesses are screwed. Amazon, Target and Walmart will survive and take up the slack even more. I think you will see a move of capital from small businesses to corporations.

- I think we are going to see high unemployment continue in the months after the epidemic is declared over. From what I am reading, this might not last. It seems like many economists (not all) are predicting a "V" recession (with a deep plunge and then a quick recovery).

- I am really curious about this; Do people with money go on a spending spree after the pandemic is over? There will be fewer cars to buy (factories are shut down world wide), but there will be pent up demand for people who have money. How quickly does this resolve itself?

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We were already heading for a recession before this hit, so I'm not optimistic about a fast recovery. There will be pent-up demand, definitely, but also people won't have the $ to buy. The Fed has nowhere to go in terms of interest rates to try to get people to ravage their savings. If people do so, it's for survival like rent, food, etc. It won't be for larger goods.

Personal credit is going to take a dive.
Before the pandemic: https://www.fool.com/the-ascent/research/average-credit-score/
Current advice from FICO: https://www.fico.com/blogs/protecting-your-credit-during-coronavirus-outbreak

Lenders are probably going to start raising their minimum FICO requirements if they haven't already: https://www.housingwire.com/articles/is-the-coronavirus-about-to-wipe-out-fha-lending/

Essentially what this means is that it will be harder for people to buy on credit (don't believe for a second that the lousy interest rates we all get on savings will ever be matched by the interest rates on credit cards). This means really big ticket items, like houses, cars, and major appliances, aren't going to be bought.

Stock lingering on shelves means stores take a hit and they lay people off/don't take them back.

And so the cycle continues.

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@jespah,

Most Americans (maybe 70% at least) will come out of this epidemic with money to spend. Most retirees will be fine, social security is being paid and retirees are supposed to have any investments in safe funds. White collar jobs are being done from home.

I am taking a cut in pay, but I will be fine financially. I will be looking to go out and spend money as soon as this is over. I imagine much of the middle class will be doing the same. I do think that this will exacerbate wealth disparity. I think service workers and lower income families will be hurt more than the middle class.

I think there will be plenty of Americans with money to spend; even on things like major appliances (The housing market is another story). This is good because it will give some incentive for businesses to ramp back up.

In the optimistic case, the "V" shaped recovery, people who have money will go out and spend it quickly.

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Did the Spanish Flu compare with this? What was the economic recovery like? Any notable transitions in business as usual?

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@maxdancona,

I don't think it will be as dire as great depression times.

I think there may be some blow back against the big corps and local business will become local again. People will want to keep their money close to the chest though so I see some markets taking a big hit like travel, airlines, cruise industry that have been having a good couple decades.

I'd like to see manufacturing come back to America in force. Unfortunately that will mean devastation to third world countries. Hopefully small business also gets back to where it was. People will still need stuff and have stuff done.

If I had a crystal ball this might be clearer.

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@McGentrix,

McGentrix wrote:

I don't think it will be as dire as great depression times.

I think there may be some blow back against the big corps and local business will become local again. People will want to keep their money close to the chest though so I see some markets taking a big hit like travel, airlines, cruise industry that have been having a good couple decades.

I'd like to see manufacturing come back to America in force. Unfortunately that will mean devastation to third world countries. Hopefully small business also gets back to where it was. People will still need stuff and have stuff done.

If I had a crystal ball this might be clearer.

The danger is that the desire to 'return to normal' will displace the impetus for sustainability reform.

There was already a strong anti-progressive stance toward green reforms before this coronaphenomenon began, and there will most likely be a strong will to suppress the politics of reform by treating reform like a luxury that can't be afforded in a climate of recovery from a crisis.

It would be nice if we could progress out of this situation with reforms that are good for both preventing future epidemics as well as preventing continuing unsustainabilities.

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@livinglava,

Im probably nver gonna shake hands again, Ill never become a "'close talker".

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@McGentrix,

Quote:

I think there may be some blow back against the big corps and local business will become local again

This would be nice. I suspect the opposite is going to happen. Many local businesses, who generally don't have big cash reserves, are going to be put out of business with the big corps picking over their corpses. The fact that people are going to be ordering more on the internet will accelerate this.

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