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.

The degree to which the coronavirus vaccine development process is being compressed (i.e., from ten years or more to one year or less) raises an abundance of ethical issues. Human volunteers for clinical trials are being exposed to unknown dangers and side effects.

The least questionable trial methodology ‒ assuming such a thing can be placed on a sliding scale ‒ monitors the results when inoculated subjects simply continue to live, as per usual, among a general population that’s been infected. If, however, there is positive progress in lowering the infection rate of the population at large by non-vaccine means, it will make it harder to obtain reliable results from the test group. Ironic, right? Therefore, the test group may need to be chosen from a location where the coronavirus infection rate is still climbing or near its peak.

If you’re someone who thinks Warren Buffet intuitively, or otherwise, knows things the rest of us don’t, then take note that he recently sold all his holdings of airline stocks. Prior to the sell-off, Berkshire Hathaway was in possession of 11% of Delta, 10% of American, 10% of Southwest and 9% of United. With truncated travel due to the COVID-19 pandemic in mind, Mr. Buffet exited the sector with these words, “The world changed for airlines and I wish them well”. Seems doubtful airline executives will find that sentiment to be of much comfort.

There’s an interesting ‘other side’ to this story. If the Oracle of Omaha has been selling, who’s been buying? Who is it that believes now is a good time to purchase equity stakes in airlines? The ‘word on the street’ is that it’s small retail investors.

Finally, here’s an observation that’s almost too cheesy to spring on anybody. In these days of reputedly unhealthy contamination nearly everywhere, all objects warrant a deep clean, including doorknobs, gas pumps and cash. That last item suggests an interesting possibility. If a mobster were able to insert his (or her) tentacles into a perfectly legitimate cleaning company, then they would be able to ‘launder money’ by laundering money.

Read the previous article here: The Economy Under COVID-19: Notes from the Trenches – May 8, 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.