As the Covid-19 virus unleashes a second wave globally, our personal views about the future – personal and otherwise – from early 2020 are longer valid. Those future views were rooted in the ‘old normal’, but we are now in the ‘new normal’. Few people venture to guess what the future might look, given the numerous unknowns, ‘it depends’, caveats, assumptions and speculations.
Here are a few observations, both personal as well from research, about where several sectors of the American economy are headed. Of course, please chime in with your views in the comments section below.
1. Weak small businesses without healthy cash reserves will continue to die. Many have been (and will be)taken over by stronger competitors. If you have cash, this is a great time to purchase businesses for pennies on the dollar. I called a local t-shirt printer earlier this morning. They’d been in business for 35 years. The phone did ring but it was answered by a competitor who had purchased the client-list, phone number, name and assets – perhaps for a song. Acquisitions will increase, particularly by private equity firms which are flush with cash.
2. Layoffs will accelerate over the next few months as the money given to companies to continue employing people during the pandemic runs out. A good and large example are the airlines and big companies like Boeing, which cannot (and will not) pay people to do work that does not produce revenues. That will swell the unemployment rolls.
3. Evictions and homelessness will increase in early 2021, as the no-eviction regulation will lapse at the end of December. The tug-of-war between landlords who need to pay their mortgages and tenants unable to afford rent payments will blow up in a very public way, rendering hundreds of thousands homeless.
4. Online shopping will continue to boom – and remain popular, well into the future. Just look at the revenues of online retailers like Amazon, Walmart and Target. There will be numerous new online shops targeting various niches.
5. Many restaurants around the world have died. Some have adapted and pitched tents outside to accommodate local regulations during the pandemic. Most people are reluctant to even go to those outdoor restaurants. Most restaurants have be selling to customers wanting takeout. Delivery services like Uber Eats and Doordash have been booming. But, this change has come at a price – lower revenues and profits. Why? For example, the most profitable items on a restaurant’s menu are the appetizer, drinks and desserts. Most people do not order those when they order takeout or delivery. But, takeout and delivery are here to stay, and many restaurants are working to make those experiences better. Look for restaurant menus to change at most of your favorite restaurants.
6. Banking has changed, and many of those changes will be permanent. One of the major banks I work with had closed its retail locations for about 6 months. Consumers and businesses have learnt to conduct our business online and with our mobile devices. Banks have also run into trouble in some sectors. With high unemployment in many sectors, delinquencies have grown. At the same time, with mortgage rates continuing to remain low (the fed has been keeping interest rates at near zero percent), many people are refinancing their mortgages and some are buying new homes – mostly people who are fleeing large cities like New York City in favor of the suburban homes in surrounding communities. For example, demand for homes across towns in New Jersey, Connecticut and New York State, in close proximity to New York City have jumped dramatically. There is an upcoming wave of foreclosures, particularly of people’s second homes, as layoffs pick up steam across several sectors.
7. 2021 will see a huge wave of home foreclosures (and homes you can buy at a substantial discount) as many people lose jobs and cannot afford mortgage payments on their first and second homes. If you have cash and/or good credit, you can buy a home at a substantial discount.
8. Personal Bankruptcies will rise, particularly in 2021. Many people, particularly in sectors that were shut down have been living off their credit cards (and home equity loans). Eviction holidays and the willingness of banks to defer payments by a few months are about to run out. Once that happens, you will see a dramatic rise in whose biggest worry is to earn money to put food on the table, not to pay the credit card companies. This is not judgment, just a harsh reality – survival ‘wins’. Additionally, you will see a rise in business for collection agencies and debt restructuring advisors.
9. Fewer people will buy cars – particularly new ones. The auto industry – manufacturers, new car dealers and used car dealers – have been hit hard by the pandemic. With people holed up at home, few want to use their savings to buy a new car. Others, who are unsure about their jobs, are unwilling to buy cars. Early signs of reduced travel showed up with lower gasoline prices and waves of 15% discounts by major auto insurance companies. Many taxi services and ride services like Uber and Lyft have been cut back. They will certainly recover, but getting to pre-pandemic levels will take years.
10. Telemedicine will become the preferred method of consultation for many medical issues.Healthcare has been changing dramatically too. You don’t have to wait in the doctor’s office and wait forever for the doctor to arrive. You can often do that from the comfort of your home – telemedicine has become common and widely accepted. Looking ahead, telemedicine is here to stay, and will become the preferred method for many kinds of medical consultation.
11. Many hotels and motels will pivot into new businesses. Hotels and motels have been hit hard. They have high fixed costs – having to pay their mortgages and for the upkeep of the infrastructure. But, they have few people traveling and coming to stay. You may see many of them disappear or pivot to other uses – like being converted to affordable housing.
12. Commercial office spaces have been emptying across the world, and will continue to do so. As businesses allowed employees to work remotely, from home, they realized that there are many advantages to the arrangement. Sure, some are stuck in long-term leases. But, many have gotten out of their leases or cut back on the space they need. Some have moved from co-locating employees in the office to simply stationing only employees who coordinate the remote workforce, vastly reducing the fixed costs of offices and related expenses.Commercial office spaces will continue emptying across the country as the demand for office space drops with more employees working remotely and many businesses shifting to temporary and gig workers.
13. Companies that require employees to work in their offices will have to rethink their policies and office layouts. You could start out with alternate cubicles being occupied. You could be using the elevator two at a time. You may even have ‘crowding detectors’ to prevent people from, well, crowding. And, employers will enforce them because it is in their own selfish interests. If the business requires office working, having a Covid case is the simplest way to prevent their essential employees from coming to the office. Irrespective of your personal views about wearing masks and taking other precautions to prevent the spread of the virus, if you do not follow the company’s policy, you risk losing your job. You will soon see a ‘Chief Health Officer’ or ‘Chief Safety Officer’, either full-time or part-time, at most companies.
14. The highly skilled will command a global job market since they can work from wherever they are. The low skilled who work in jobs that require their physical presence will face the highest competition for jobs. Having thousands of people applying for a single job are commonplace.
15. Gig workers and freelancers will see a heavy pressure on their rates, and therefore income, as the abundant supply of competition will accelerate the ‘race to the bottom’. The highly skilled and professional ones will continue to thrive. The ones who are ‘still living in the old normal’ (“I used to get paid $XXX/hr and won’t accept anything less”) while having average skills will struggle with fewer jobs for demanding out-of-whack compensation, or because supply exceeds demand.
16. Many dry cleaners across the country, already under pressure, will go out of business. With a majority of people working from home – and many who will continue to do so for a long time – fewer people need their clothes laundered or dry cleaned. Many people will spend money on a good iron and ironing board for their tops instead of going to the cleaners or buying good pants – cleaners will launder more shirts than pants.
17. Many students who feel invincible will contract Covid-19. Many of them (mistakenly) think that Covid-19 affects only older people. It all depends on your individual immunity and chemical composition. Remember, each of our bodies is simply a combination of many chemicals that have come together to form our bodies. Over your lifetime, what you eat (or not) and your lifestyle will determine your unique chemical composition (and immunity) today. The virus is a protein which will affect different people’s bodies differently. My daughter, who is attending college, has a friend aged 19 who lost eyesight for 8 hours and developed an enlarged heart after testing positive. If Superman and Superwoman were real human beings, they too would be susceptible to Covid-19.