Post-2020 Economic Impact?

2,214 Views | 22 Replies | Last: 5 yr ago by Rock Too
The Lost Hondo
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2:03p, 8/3/20
AG
Have you seen any articles or studies on medium- to long-term economic impact?

It seems obvious that the shutdown will create a long-term economic mess, but how will that play out? How will unemployment, foreclosures and business shutdowns affect other industries that so far are weathering the storm and even thriving during the shutdown?

The US is printing money with abandon. Are we looking at skyrocketing taxes starting in 2021?

I recognize the difficulty in talking about the economy without going all political. Apolitical analysis and objective opinions are the most interesting to me.


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evestor1
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2:08p, 8/3/20
In the post 2020 world it would be better to be dead of CV19.


The overblown kill yourself before you die mantra has contributed to a fundamental shift in life.
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knoxtom
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2:20p, 8/3/20
Doubt they will do it with taxes, they will just monetize the debt.

It will be absorbed into massive inflation.
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H.E. Pennypacker
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In reply to The Lost Hondo • 7:23a, 8/4/20
AG
The Lost Hondo said:
Have you seen any articles or studies on medium- to long-term economic impact?

It seems obvious that the shutdown will create a long-term economic mess, but how will that play out? How will unemployment, foreclosures and business shutdowns affect other industries that so far are weathering the storm and even thriving during the shutdown?

The US is printing money with abandon. Are we looking at skyrocketing taxes starting in 2021?

I recognize the difficulty in talking about the economy without going all political. Apolitical analysis and objective opinions are the most interesting to me.




It would seem my first question would be to ask if you think the shutdown, not the pandemic, is the greatest economic interrupter of 2020? Is that to mean you think it would have been business as usual if there had been no shut down? I think that has been the assumption by some, but I see no real world possibility of that not being totally shortsighted/naive/unrealistic.

Our economy, as it existed prior to 2020, was a war/pandemic free economy. The market/consumer conditions are fundamentally changed.
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agforlife97
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8:41a, 8/4/20
AG
Seems like the hotel/resort/hospitality industry is probably hosed for a long time. I think we're just now starting to see the tip of the iceberg in terms of small business closures. I live in San Antonio, and I noticed yesterday a UTSA-centric bookstore that had closed down. I think basically anything with a physical location is at risk.
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culdeus
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10:01a, 8/4/20
AG
Hearing that car loans are defaulting like crazy from a buddy that underwrites for a big bank.

Credit card workouts are spiking.

The low level credit issues has a way of spiraling up from there.
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SouthTex99
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In reply to knoxtom • 10:20a, 8/4/20
AG
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QuantumNoodle
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In reply to SouthTex99 • 11:49a, 8/4/20
SouthTex99 said:
knoxtom said:
Doubt they will do it with taxes, they will just monetize the debt.

It will be absorbed into massive inflation.
I think just the opposite. We are looking at a long term Japan-style stagnation/deflation. Rates will be lower for longer and possibly negative at points over the next 10-15 year window. Demographic shifts and technology-enabled disruption were already at work pre-pandemic. The extra debt and changing preferences (tech, work from home) set these shifts in stone. Taxes will go up but it's hard to guess how much they can without serious blowback. They were already historically high pre-Trump. Even with Trump state and local taxes have continued to rise, which is another issue entirely.
To say that taxes were already historically high is simply not true. See graph below.

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909Ag2006
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12:41p, 8/4/20
AG
Maybe I'm being totally naive, but if we get an effective vaccine rolled out in Q4 2020, and the pandemic slows to a level that it is effectively over in Q1 2021, why don't you think we will reach the same level of economic activity we were enjoying pre-covid by the middle of next year?
"They weren't raiding a Girl Scout troop looking for overdue library books."
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SouthTex99
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In reply to QuantumNoodle • 1:24p, 8/4/20
AG
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Aust Ag
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2:38p, 8/4/20
AG
Dining room capacity limits are hurting upscale steakhouse chains Ruth's Chris, Morton's , and Fleming's Prime Steakhouse. Customers don't think of these eateries for takeout. Also , think of all the high-end business lunches and dinners that aren't happening. Some will close.
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amercer
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In reply to 909Ag2006 • 2:45p, 8/4/20
AG
909Ag2006 said:
Maybe I'm being totally naive, but if we get an effective vaccine rolled out in Q4 2020, and the pandemic slows to a level that it is effectively over in Q1 2021, why don't you think we will reach the same level of economic activity we were enjoying pre-covid by the middle of next year?


People have short memories, so I don't think there will be long term behavioral changes (I'm not even convinced that WFH is here to stay).

When everyone comes out from hiding next year they will probably be supersized by all the boarded up business. This will be the death of most brick and mortar shops. And probably of the cruise industry.
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evestor1
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3:36p, 8/4/20
Quote:

People have short memories, so I don't think there will be long term behavioral changes (I'm not even convinced that WFH is here to stay).

When everyone comes out from hiding next year they will probably be supersized by all the boarded up business. This will be the death of most brick and mortar shops. And probably of the cruise industry.


Agree completely - WFH is going to be something people will wish they never joined. The WFH crew at my work is slowly being sorted to TWC. Those in office are not feeling that.


Brick and mortar will be back, but the excessive rates / rents will be reduced ... reduces taxable base ... kills everyone and everything.
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Sisyphus
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3:39p, 8/4/20
Those who still have jobs are hoarding cash much more than normal since they aren't going out to eat, traveling internationally, etc. That will help the economy recover when all that pent-up demand is released.

The problem is corporate and personal debt. There was already a lot of speculation that there was way too much bad corporate debt even before the pandemic. Indebted corporations are going to go bankrupt and won't repay their debts. Unemployed people will also start defaulting on car and home loans. If that gets to the level that financial institutions are affected and we get another credit-crisis (similar to the Great Recession) then the economy could collapse again and the recovery will take several years
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BusterAg
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In reply to QuantumNoodle • 3:40p, 8/4/20
AG
RockOn said:
SouthTex99 said:
knoxtom said:
Doubt they will do it with taxes, they will just monetize the debt.

It will be absorbed into massive inflation.
I think just the opposite. We are looking at a long term Japan-style stagnation/deflation. Rates will be lower for longer and possibly negative at points over the next 10-15 year window. Demographic shifts and technology-enabled disruption were already at work pre-pandemic. The extra debt and changing preferences (tech, work from home) set these shifts in stone. Taxes will go up but it's hard to guess how much they can without serious blowback. They were already historically high pre-Trump. Even with Trump state and local taxes have continued to rise, which is another issue entirely.
To say that taxes were already historically high is simply not true. See graph below.

This graph is not really all that informative.

This is kind of like evaluating the competitiveness of a sports team by looking at the salary of the highest paid player.

Any chance you have graph on total tax receipts of all levels of government compared to GDP over time? Much more relevant.
It takes a special kind of brainwashed useful idiot to politically defend government fraud, waste, and abuse.
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Benny the Jet Rodriguez
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In reply to 909Ag2006 • 3:40p, 8/4/20
AG
Closed businesses, unemployment, uncertainty, etc.
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BusterAg
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In reply to 909Ag2006 • 3:51p, 8/4/20
AG
909Ag2006 said:
Maybe I'm being totally naive, but if we get an effective vaccine rolled out in Q4 2020, and the pandemic slows to a level that it is effectively over in Q1 2021, why don't you think we will reach the same level of economic activity we were enjoying pre-covid by the middle of next year?
If we stick with the same economic policies, we should bounce back.

Commercial real estate will be a challenge. So will a few of the travel industries. O&G will take a while to come back, but will with force in a couple of years.

Everyone else should not miss a beat. Bankruptcies are just now starting to hit the system, and people are very wary to liquidate right now if they can prevent it.
It takes a special kind of brainwashed useful idiot to politically defend government fraud, waste, and abuse.
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Aust Ag
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5:25p, 8/4/20
AG
Whoever is in office in January will be in for an azz whippin. The economy will be in tatters. We're not anywhere near the bottom.
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culdeus
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In reply to 909Ag2006 • 5:45p, 8/4/20
AG
909Ag2006 said:
Maybe I'm being totally naive, but if we get an effective vaccine rolled out in Q4 2020, and the pandemic slows to a level that it is effectively over in Q1 2021, why don't you think we will reach the same level of economic activity we were enjoying pre-covid by the middle of next year?

I mean I can't go back in time and fly the trips I planned on taking and I can't double down on trips next year to make up for it.

I'm not going to buy two suits (example, I don't wear suits) next year because I didn't buy any this year.

All the consumption changes won't just cause a 180 in behavior and a re-doubling because the virus is gone.

Does Orange Theory Fitness charge double to make up the gap from 2020? No. That doesn't work either, although I do hear that flights in general are expensive AF rn.

I think it stands to reason that interest rates will stay low to incentive people to spend that money they stashed under their mattress while the zombies were out.
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Duncan Idaho
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5:53p, 8/4/20
MMT. Google it. Right or wrong we are going to experiment with it.
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Bottlerocket
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In reply to Duncan Idaho • 8:26p, 8/4/20
AG
Duncan Idaho said:
MMT. Google it. Right or wrong we are going to experiment with it.


Yikes
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Rock Too
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7:07a, 8/5/20
AG
US dollar biggest concern I have......Fed keeps buying assets to support liquidity on bonds, been doing it most the year. If Biden raises rates like expected then stagflation is a real possibility and inflation looks probable if we keep spending. We need to cut spending but I'm convinced that will never happen.....no political will anywhere.

The structure of the economy will definitely change.....the tech buying is signaling this, as well as their access to cheap Chinese labor. Today consumerism is dead in the US.......hard to see leisure travel jump back to where it was especially international travel and cruise ships. Less commuting for sure, people have learned to work at home.....this will hammer commercial real estate, another segment that will likely not come back to pre-virus levels. Energy has taken the double whammy of demand and over supply from OPEC.....don't thing it will bounce back if demand does not bounce back.

Suggests unemployment will remain on the high side for awhile as the economy is restructured. Hard to see where the new jobs will come from of growth is more tech driven, more efficient. Green energy and housing market only bright spots I see that actually create blue collar jobs.

Again, all points to stagflation, high unemployment and weak dollar as US reserve currency takes a hit. Finding places to invest in US dollar markets will be tough I think. A lot repricing needs to happen to clear the air.
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tysker
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In reply to Duncan Idaho • 7:13a, 8/5/20
AG
Duncan Idaho said:
MMT. Google it. Right or wrong we are going to experiment with it.
Going to? We're in it.
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Rock Too
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In reply to Duncan Idaho • 7:39a, 8/5/20
AG
Duncan Idaho said:
MMT. Google it. Right or wrong we are going to experiment with it.
We already are, have been since Great Recession. But markets will still force a valuation. With MMT it comes via a weak currency. US dollar could look like a 3rd world currency vs the reserve currency it is today.
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