OaktownBear said:
Unit2Sucks said:
I'm actually pretty interested to see how it goes when Georgia and other states open up. I wish that we could do it in a more scientific way and have a few different states and areas open up with different styles so that we could study it but we will learn from this even without that.
Don't get me wrong, I don't think it's a good idea, but if a particular state's governor has decided to take on this risk at least the rest of us can learn from it.
The thing is people are only asking the health question. The other question is how does the economy respond. Opening restaurants doesn't mean you will get nearly the people going to them if people don't feel safe. I'd guess the percentage of people that were against sheltering will be out in force at the beginning, but can they sustain the whole economy
FWIW, Newsom's order has been relaxed in the OC. All city beaches are open, white collar workers have determined they are all essential and gone back to work (full parking lots where our office is located), city's have stopped enforcing stay at home, parks are now open, and the only thing really closed are businesses with direct contact with the public, like retail and sit-down restaurants and non-essential government services. Traffic is starting to return. Most people are using masks when out in public (not in Huntington Beach which appears to be the center of the "resistance"). But basically we are coming out of lockdown whether everyone likes it or not. Newsom has really backed-off challenging anyone.
The economy is another story. From what I can see out of most government officials is they have plans on health considerations, but nothing to offer on economic recovery. Many households had little savings and a lot of debt and are very poorly positioned to deal with the impact of job loss. A lot of retail simply will not come back -we are commercial landlords and most shuttered tenants will not make it if the quarantine lasts as long as some Governors are suggesting. Some tenants have given-up. Maybe this is me, but I'm not going to a restaurant, gym etc, for a long time, and I don't think I'm alone. The tens of millions who lost their jobs during the pandemic will come out of it with little savings or debt, lower credit ratings, and more fear about the future. They are not exactly going on a shopping spree when the Governors get around to opening up business. Some of what the government is doingthe $1,200 per adult payments to households, the expansion of unemployment insurancewill partially offset that in some low cost states, but that isn't going to help all that much in expensive states.
States that engaged in large scale "social distancing" reduced consumer spending and workers' wages and, in turn, caused sales and income tax revenues to plummet. There is no real estate markets and real estate values have plummeted, meaning less property tax revenue, even in states with Prop. 13 like structures (there is Prop. 8 in California). Increases in unemployment will boost spending on unemployment insurance and make more people eligible for Medicaid, both of which state governments finance. Lower taxes and increased demands for funding will impose severe strains on state and local budgets. State and local governments have been spending way beyond their means, and unlike the Federal government they can't print money and have debt. The solution is a federal bail out, which seems unlikely, or massive cuts to non-essential services and layoffs, which doesn't help the economy, or massive tax increases, which is just wonderful for an economy in free fall.
Basically Oakbear asks if consumers can bring back the economy given fears over COVID. He certainly is speaking to me - I'm changing my behavior until way past when some politician thinks it is safe. Taking an even deeper dive, consumers, who have always been critical to the economy, are unlikely to be able to propel it forward once lockdown is officially dropped. I don't see any company related to travel getting business soon.
Until people feel sure about an effective vaccine and manageable treatment for the virus, they may be reluctant to travel or even to circulate as widely as they used to, producing lower levels of economic activity overall.
Small business already operating on thin margins are gone. There are no new commercial loans being written right now. Most companies are facing severe cash flow problems, with the obvious result with capital. A rapidly deteriorating job market will hurt consumers badly, and for many the damage will not be temporary, Unemployment will remain high for some time.
Many businesses that do survive will not regain the same vigor because they are dependent on strong consumer demand. Those who go back to work quickly are still likely to emerge from their experience of sheltering at home with less ability to resume spending at the same levels. Latest stats say large numbers of households are falling behind on major debt obligations, such as rent and mortgage (FED data hints Coronavirus May trigger US Housing Crash (San Francisco Federal Reserve Board, April 17, 2020 UTC), auto loans, and credit card bills. Many states said no foreclosures or collection actions, but they didn't say no abatement of debt (they can't legally), but when the orders go away, so go the protections.
And it is only going to get worse as lockdowns continue. Public officials think the are trying to balance health and safety with economic well-being. But if they don't show people a path to economic return, that decision will be simply taken away from them by wholesale non-compliance with executive orders. It is already starting.