The Economy Under COVID-19: Notes From the Trenches

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.

In Q1 of this year, China’s ‘real’ (i.e., after-inflation) gross domestic product (GDP) declined by -6.8% compared with the first quarter of 2019. It was the first year-over-year contraction for the country since the National Bureau of Statistics began releasing official GDP estimates in 1992. In the previous period, Q4 2019, China managed output growth of +6.0%, but then the coronavirus descended on the city of Wuhan and the province of Hubei in last year’s final days. Isolation measures rippling out to cover much of the country stopped economic activity in its tracks.

The lockdown restrictions in China have now been lifted, with Wuhan being the last to see the easing. The word out of Wuhan, however, is that even though shopping malls are up and running again, consumers remain reluctant to step inside.

Back home in the U.S. and Canada, there are certain consumer items that have been flying off store shelves and are reputedly in short supply. Included on the list are flour, yeast, eggs, diapers, baby wipes, toilet paper and hair dye.

Pandemic-caused temporary sawmill closings ‒ there have been more than 30 in Canada, with most in British Columbia ‒ have shrunk the mountains of wood chips and sawdust used to produce the pulp that is so important in papermaking.

Really? Is this going to be the new date night? Governor Newsom of California says that going out for a meal at a restaurant when the economy tentatively re-opens may involve getting your temperature taken at the door, having a choice of only half the number of tables that used to be available (to keep social distancing), being served by a waiter in a mask, and a ritualistic tearing up and disposing of the menus after ordering. I’m partial to the last idea, particularly if done in a shallow dish with the aid of a match. Accompanied by the proper flourish, it would be performance art, like being served Saganaki.

Read the previous article here: The Economy Under COVID-19: Notes from the Trenches – April 24, 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.