The Economy Under COVID-19: Notes From the Trenches - April 22, 2020

There are currently two crises underway simultaneously. The advance of the novel coronavirus is taking a terrible toll in terms of physical and emotional well-being. At the same time, job losses resulting from ‘social distancing’ are sending the economy into a tailspin. To fight on both fronts, governments are advancing rescue packages of never-seen-before dimensions. Every day, the tremendous number of factors in play reconfigure in a new way. These ‘from the trenches’ notes attempt to shed some light along a murky pathway.

• Beyond stock market prices, which can display a lot of ‘chatter’ (i.e., large up and down changes), there’s another important daily indicator of how the economy is doing, electricity usage. With retail stores, offices and factories closed during the coronavirus crisis, the decline in the commercial consumption of electricity has been greater than the increase in the amount of power used in residences. There’s been a big increase in the number of people set up with laptop and desktop computers to work from home.

• Residential power consumption has shot way up on weekdays but has not increased much on weekends versus previous patterns. This is confirmation of what we’ve already intuitively grasped, that the distinction between weekdays and weekends has blurred. Everybody being tied together by smart phones started the ball rolling years ago.

• Not widely discussed, but in the background anyway, are contingency plans to keep essential power flowing. The hope is that this will never occur, but given COVID-19’s ability to spread stealthily and rapidly, there may come a time when a power utility or two will be forced to ask its control room operators to live on site, to limit the risk of contagion from outside.

• Greatly reduced vehicular and air traffic has been one major cause of the steep slide in the price of oil. The net reduction in the usage of electricity, supplied by plants that are gas-fired and/or have been converted over from coal, is behind lower natural gas prices.  

• On what seems like day number ‘infinity’ of sheltering at home, our direwolf comes to me, while I’m sitting at my computer, and says, “I wanna go for a walk.”
  “No, not now, I’m busy,” says I.
  “Yes, right now,” he asserts.
  “Go read a book or something,” I reply.
  “If we don’t go right now, there will be consequences,” he snarls.
  “Yeah? How so?”
  “I know people. Powerful people.”
  We’re interrupted as my wife walks down the stairs. I tell her she’d better have a word with her unruly direwolf.
  She looks at me quizzically and says, “What direwolf?”

Read the previous article here: The Economy Under COVID-19: Notes from the Trenches – April 21, 2020.

Alex Carrick is Chief Economist for ConstructConnect. He has delivered presentations throughout North America on the U.S., Canadian and world construction outlooks. Mr. Carrick has been with the company since 1985. Links to his numerous articles are featured on Twitter @ConstructConnx, which has 50,000 followers.