Peter Katevatis - Apr 16, 2020
As the world exits the COVID-19 quarantine we will need to adapt to the new abnormal.
The Earth has seen many viruses infect its inhabitants over the millennia and will see many more in the future. The “extreme” effect of COVID-19 on the humans in 2020 has more to do with the speed of information and over-reaction to that data than anything else.
Our current society ranks safety much higher than almost anything else. Some common safety or environmental concerns seem commonplace today but previous generations dealt with things differently. For example:
- If your child weighs less than 40 lbs they MUST have a booster seat (previous generations were a wee bit looser on this).
- Take-out restaurants CANNOT use plastic straws (turtles were eating them)
- If you are smoking you cannot be near anyone who is working or within 2 metres of an air intake (there used to be smoking on planes!)
- Having a couple beers and getting behind the wheel is a VERY BIG no-no (anyone remember the 1970s?)
The financial ramifications of a global economic shut down for slowing the spread of COVID-19 will do much more than “flatten the curve”. I understand the strain our hospitals would have if everyone got sick and rushed to see a doctor on the same day, but there is an economic cost to these isolation measures.
Let’s start with the definition of a recession, an economic recession is official after an economy has contracted for two consecutive quarters (6 month period). With many businesses in full shut-down mode and others operating at a fraction of their current revenue levels we will definitely see a major economic contraction. Since we are still in the middle of the contraction we don’t know how long it will take. It is possible that we resume our “new normal”, get businesses open, kids back to school, parks open before we have an official recession. The first half of 2020 may end up being a short-term economic shock.
On the day of this writing (April 16th 2020) it doesn’t seem that will happen anytime soon. The public hysteria over touching anything (Crosswalk signals, mail, gas pump, etc) will last for a while even after isolation rules are relaxed. It will be rare to go out and see nobody wearing a mask (even if it’s the same one they have used the past 5 times). This new abnormal will create behaviours that will slow the economy, specifically:
- Less eating out at restaurants
- Less excitement to attend large events, concerts, festivals
- Less of a desire to ride the bus or train (more traffic *argh*)
- Less of a desire to travel to foreign countries via plane or cruise ship
- Less of a desire to peruse the shops at the mall
Some of these behaviours will linger far into the future. What seems abnormal today (smoking on the plane) was completely normal with historical context.
On the positive side, there has been a renewed sense of community since we are all in this together. Everyone has been affected and there is audible support for health care workers every day at 7pm. We long for human interaction and eagerly await being able to connect face to face beyond our digital devices.
The reliance on technology to entertain and connect us has been one of the true bright spots of the sheltered economy. I have been particularly impressed by my client’s willingness to use phone, text, and video to meet and chat. We are here to help those that are worried and ensure their portfolio matches their long-term financial goals. Let’s connect professionally over a video chat, I’ll help you figure out how to do that too.