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.
- When the coronavirus crisis leapt up in China and many factories were closed due to worker shortages and to halt the spread of the disease, customers around the world were alarmed by the severing of component and final product supply lines. Now, it’s the other way around. Chinese factories are back up and running, but their customers have gone into hiding. Lockdowns in Europe and America have greatly cut into demand for China’s output. Seems no-one can catch a break these days.
- Except here’s a thought. Late last year, several of the largest milk producers in the U.S. slipped into bankruptcy due to a prolonged decline in the consumption of their product. Beverage tastes have been moving in other directions. But with so many families currently complying with instructions to stay in their homes for weeks and maybe months, perhaps there will be a resurgence in purchases of nutritious and low-cost milk.
- Canada and several American states have legalized recreational use of marijuana. It will be interesting to learn to what degree COVID-19 anxiety is impacting cannabis sales.
- Among the ‘things’ we shut-ins are buying over the Internet are computer hardware and software items (e.g., home-viewing entertainment packages) so that we can, in turn, buy more ‘things’ over the Internet. This is an instance of retail sales spiraling up, not down. Also, it’s sure to have implications for how most of us will perceive the world post-crisis.
- During the last period of extreme economic weakness, ConstructConnect’s grand total construction starts, in dollars, were -16% in 2008 and -18% in 2009. That’s a cumulative drop of -31%. Engineering starts weren’t adversely affected at all. The problem lay with non-residential building work and, even more, with residential groundbreakings.
Read the previous article here: The Economy Under COVID-19: Notes from the Trenches – March 31, 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.