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The Economy under COVID-19: Notes from my New Hiding Place - Within the Herd (May 29, 2020)

Alex Carrick
The Economy under COVID-19: Notes from my New Hiding Place - Within the Herd (May 29, 2020)

Since we’re all cautiously emerging from sanctuary, the former title of my articles, written while I was housebound – Notes from the Trenches, – no longer applies. Therefore, I’ve chosen a new heading, as you will observe above. It still captures a certain wariness on my part.

  • Here are words we’ll keep hearing, in some form or another, out to the end of this year: … for restaurants, most retailers, hotels and motels and even universities and colleges, ‘social distancing’ is a high-cost way of doing business. … (Plus, there’s a significant added expense to be borne from frequent deep cleaning to expunge the coronavirus.)
  • Hertz Corp., which was launched with a business model of renting out Model T Fords in 1918, has filed for bankruptcy protection. The company is looking for a respite from creditors while it downsizes and restructures. Dollar Rent A Car and Thrifty are brand names under the Hertz umbrella.
  • Much of a car rental company’s revenue (more than half) comes from pick-up operations at airports. Unfortunately, passenger flow-through at airports has dropped nearly out of sight. The daily TSA checkpoint traveler number for May 15, 2020, was -91% year over year (i.e., 250,467 versus 2,664,549 in Mid-May 2019). (TSA stands for the Transportation Security Administration.)
  • When car rental companies hurt, the pain radiates outwards, dulled only a bit, to motor vehicle manufacturers. The rental firms traditionally buy big fleets of cars, SUVs and light trucks from automakers.
  • Speaking of airline traffic, Air Canada has announced that it will be reducing the size of its 38,000-employee workforce by half over the next several months. The company has been able to keep flight staff and mechanics on to this point in time only thanks to Ottawa’s emergency wage subsidy program. The airline says it’s currently flying at just 5% of last year’s capacity. 225 of its planes are ‘parked’. 
  • Until recently, every weekend year-round and scattered far and wide across every city, there’s been an activity that has reliably generated a great many employment and catering opportunities, while being largely taken for granted by business analysts ‒ wedding receptions and dinners in banquet halls and hotel ballrooms. Restrictions placed on gatherings to recognize the coming-together of willing partners have been another source of pandemic-related economic woe.

Read the previous article here: The Economy under COVID-19: Notes from my New Hiding Place – Within the Herd (May 27, 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.

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