05-17-2020, 12:46 PM
https://www.economist.com/briefing/2020/...ave-behind
The entire article is pretty good, but you'll find this section particularly relevant:
And for its troubles, Sweden has 365 deaths per million population (behind only Belgium, Italy, UK, Spain, and France among large European countries), while Denmark's per capita death rate is a quarter of Sweden's (95 per million). Other Nordic countries are even lower: Finland is down at 54 per million, Norway is down at 43 per million, and Iceland has less than 1/10th the per capita death rate of Sweden at 29 per million (though I will grant you that as a small island nation Iceland probably had n easier time controlling COVID-19 than any other European country).
The evidence is that in terms of spending, it is not the lockdown or fear of a lockdown that drives consumer behavior (and thus, has screwed businesses), but rather fear of the impending pandemic. Consumers aren't stupid either. Forget an impending lockdown. Consumers see bodies piled in refrigerated trucks on the news, and lockdown or no, they are going to minimize unnecessary spending. They know that lockdown or no, their restaurant or retail or travel-related job is going to be in peril, and regardless of whether they have been laid off or not, they are going to retrench their spending because you never know.
I'll give you one example. I think I mentioned, in an early thread about the pandemic, that heading into the year, I was looking to buy a new car but that the pandemic and working from home put a temporary pause to that. It wasn't so much that my job was in jeopardy; I can work from home, my company's first quarter earnings met expectations (though the distribution of which products grew was impacted) and since the pandemic I have been busier than ever working on clinical trials of drugs to potentially treat COVID-19. I've even been helping interview candidates for three new positions. On the flip side, what was the point in getting a new car if I'm not commuting any more.
Ultimately, though, I saw an ad for a mint condition used car at a steep discount that had been purchased in December and had 2200 miles on it. The seller still had his job, but basically didn't want to have to be making car payments every month for a car he didn't need. Under different circumstances, the seller is probably not trying to unload his nearly new car, and I probably would have bought a new car instead, and we keep the car plants (and thus the economy) going. And this scenario happened to two people whose jobs weren't directly impacted by the pandemic and/or shelter in place orders.
BC
The entire article is pretty good, but you'll find this section particularly relevant:
Quote:Some indication that the spending effects of a lockdown will persist even after it is over comes from Sweden. Research by Niels Johannesen of Copenhagen University and colleagues finds that aggregate-spending patterns in Sweden and Denmark over the past months look similarly reduced, even though Denmark has had a pretty strict lockdown while official Swedish provisions have been exceptionally relaxed. This suggests that personal choice, rather than government policy, is the biggest factor behind the drop. And personal choices may be harder to reverse.
And for its troubles, Sweden has 365 deaths per million population (behind only Belgium, Italy, UK, Spain, and France among large European countries), while Denmark's per capita death rate is a quarter of Sweden's (95 per million). Other Nordic countries are even lower: Finland is down at 54 per million, Norway is down at 43 per million, and Iceland has less than 1/10th the per capita death rate of Sweden at 29 per million (though I will grant you that as a small island nation Iceland probably had n easier time controlling COVID-19 than any other European country).
The evidence is that in terms of spending, it is not the lockdown or fear of a lockdown that drives consumer behavior (and thus, has screwed businesses), but rather fear of the impending pandemic. Consumers aren't stupid either. Forget an impending lockdown. Consumers see bodies piled in refrigerated trucks on the news, and lockdown or no, they are going to minimize unnecessary spending. They know that lockdown or no, their restaurant or retail or travel-related job is going to be in peril, and regardless of whether they have been laid off or not, they are going to retrench their spending because you never know.
I'll give you one example. I think I mentioned, in an early thread about the pandemic, that heading into the year, I was looking to buy a new car but that the pandemic and working from home put a temporary pause to that. It wasn't so much that my job was in jeopardy; I can work from home, my company's first quarter earnings met expectations (though the distribution of which products grew was impacted) and since the pandemic I have been busier than ever working on clinical trials of drugs to potentially treat COVID-19. I've even been helping interview candidates for three new positions. On the flip side, what was the point in getting a new car if I'm not commuting any more.
Ultimately, though, I saw an ad for a mint condition used car at a steep discount that had been purchased in December and had 2200 miles on it. The seller still had his job, but basically didn't want to have to be making car payments every month for a car he didn't need. Under different circumstances, the seller is probably not trying to unload his nearly new car, and I probably would have bought a new car instead, and we keep the car plants (and thus the economy) going. And this scenario happened to two people whose jobs weren't directly impacted by the pandemic and/or shelter in place orders.
BC