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A Long Time Until the Economic New Normal

sloanreview.mit.edu

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Re: A Long Time Until the Economic New Normal

#41

Post by toomuchtodo »

sremani wrote: post #21
bwb wrote: post #12

Earlier quoted context omitted.

I'd also point out that planning for "high risk" events like this is not something small to medium size businesses should be doing. Government yes, but I don't expect my mexican restaurant to have a plan in case of a global pandemic :). Just like I don't expect them to hedge pork futures so my pork tamales don't go up 8 cents. Gov is insurance and I want them to be building resilience into the system. That is done wi…

A Global Pandemic is NOT A BLACK SWAN. As matter of FACT, it was predicted by Taleb and according to him it is a WHITE SWAN. The true problem here is the so called Risk "experts" do not understand Risk, and that is the core problem.

The CDC had a pandemic team, they were let go. California had a reserve of ventilators, which were liquidated due to “budget reasons”.

The problem isn’t risk experts; the problem is that government representatives elected have no domain expertise nor leadership fortitude to put domain experts into the driver’s seat when the situation dictates.

China, for all its failings, gets this right. Their leadership is more STEM and less lawyers and politicians.

Re: A Long Time Until the Economic New Normal

#42

Post by rwmj »

jointpdf wrote: post #25
rwmj wrote: post #8

Earlier quoted context omitted.

For many people outside the highly paid HN reading bubble that's a huge windfall.

It’s really not. Even in a low cost of living area, $1.2K is about one month of basic living expenses.

You're thinking about this wrong: consider it terms of how much floating cash you have available. If you are paid $2000/mo but pay out $1800/mo in living expenses (rent, bills and food), then you have $200/mo to spend on fun. Then you receive a check for $1200, that's 6 months of fun in one go.

If you are paid weekly, the amount of cash you have in your pocket might only be $50, and then only on a Friday night, so $1200 looks like an extraordinary windfall.

Re: A Long Time Until the Economic New Normal

#43

Post by twelve40 »

JackFr wrote: post #9

The points made are fine insofar as they go. At the same time, the current economic situation is, very literally, unprecedented. It has aspects of a war, a natural disaster and a secular recession. Economists should try to estimate its effects, but in this case their predictions need to be taken with an extra large grain of salt.

How is it very literally unprecedented? Spanish flu had much deadlier properties, "work from home" wasn't even possible, there were no antibiotics and almost none of the modern med tech, yet there is no mention of a "1919 economic collapse". Death toll in the US was So I'd say it looks very much "precedented", and during the last precedent the situation was much much worse, and the world moved on just fine for another decade after that.

Re: A Long Time Until the Economic New Normal

#45

Post by jvp »

coldcode wrote: post #4
frockington1 wrote: post #2

The articles states as fact there will be negative impacts on long term consumer sentiment and spending without really providing any evidence. Most Americans are about to receive a $1200 check and unemployment benefits that pay more than their job did for the next 6 months. I don't think consumer spending is going anywhere soon.

How many people on a single $1200 check and unemployment will go out and buy a car, a house, a washing machine or visit a Disney park?

A house?! Come on.

Re: A Long Time Until the Economic New Normal

#47

Post by hello_moto »

taneq wrote: post #32
dlp211 wrote: post #29

Earlier quoted context omitted.

You are likely not the average American consumer.

From everything I've read, I'm amazed the average American has enough spare money to consume non-essentials.

USA is a prosperous country. You should check the content of a typical suburban houses.

Re: A Long Time Until the Economic New Normal

#48

Post by thehappypm »

bwb wrote: post #16
frockington1 wrote: post #2

The articles states as fact there will be negative impacts on long term consumer sentiment and spending without really providing any evidence. Most Americans are about to receive a $1200 check and unemployment benefits that pay more than their job did for the next 6 months. I don't think consumer spending is going anywhere soon.

Just a note, unemployment isn't working, that $600 bucks hasn't been reported received by anyone because they are not sure how to deploy it. I am sure it will come, but it might not be for another 3 to 4 weeks. Which if you have bills and rent you might be in big trouble. Does anyone have reports of anyone getting it? None of my friends who were laid off are getting it yet and the states they talked to say they are w…

I have friends who received it, Massachusetts.

Re: A Long Time Until the Economic New Normal

#49

Post by ozborn »

kristianc wrote: post #35
bwb wrote: post #12

Earlier quoted context omitted.

I'd also point out that planning for "high risk" events like this is not something small to medium size businesses should be doing. Government yes, but I don't expect my mexican restaurant to have a plan in case of a global pandemic :). Just like I don't expect them to hedge pork futures so my pork tamales don't go up 8 cents. Gov is insurance and I want them to be building resilience into the system. That is done wi…

> Gov is insurance and I want them to be building resilience into the system. This is kind of one of those ‘Hindsight is 20-20’ things. During the good times, building resilience means buying extra capacity that you do not need, and answering awkward questions about empty wards and hospital beds. In good times, the demand from the people is that every dollar is spent well, which is usually defined as meeting demand i…

In Finland, they apparently are willing to plan ahead and can handle questions about unused equipment...

https://www.nytimes.com/2020/04/05/world/europe/coronavirus-...

Normally I don't link NYT, but there is no paywall for Coronavirus coverage.

People talk about efficiency, but efficiency also means fragile because there is no slack or fat in the system.

Re: A Long Time Until the Economic New Normal

#50

Post by rwmj »

drocer88 wrote: post #37
david_w wrote: post #19

From the article: "The first is that it overlooks the negative impacts on consumer sentiment and spending, which are likely to persist for many months, if not years. " Yeah, right. Citation needed. My to-buy list of pent-up demands grows longer by the hour.

A lot of folks are going to take the traditional advice of having 6 months of living expenses in emergency savings seriously this time.

How? Many people are paid week to week and have just enough to get by.
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