Covid Economic Recovery: Faster Than You Think

I've been reading on here (and articles) about how "screwed" we are economically and will be for the foreseeable future.

I think that's false - my argument for why is below.

Disclaimer: My intention isn't to paint an "overly rosy" view of the future - these are simply factors that I don't see being discussed a lot - which is exceptionally bullish for the economy in my view.

First, think about the number of people who are unemployed a little differently.... what slices of the workforce are easily identified as areas impacted by Covid?
- Medical providers and support staff who perform "elective" surgeries.
- Construction workers.
- Service economy folks from bar tenders, to waiters, to gas station attendants, hair stylists/barbers and more.

So if I think about those buckets alone.... lets scale that out.

16mm people work in Healthcare:
www.healthleadersmedia.com...

~9mm people work in Construction:
datausa.io...

~683k people work as a hair stylist or barber:
www.bls.gov...

~15mm people work in the food industry:
upserve.com...

We'll call that ~40mm people across those industries alone.

I'm going to assume that we have 20mm of those people are out of work or their normal hours/income impacted in some way.

Could be more - very well might be - or could be less. It's a lot either way.

With the table set - here's what I expect will happen:
1. The millions of healthcare jobs that were displaced will come back online much more quickly than people think - lots of people who want/need their "elective" surgery done.
2. Construction will go back to nearly the same level of employment as pre-Covid and that will happen very quickly.
3. Food industry will take longer. I bet you get 50% of the jobs back at least over the 90 days following restaurants opening up. Why? Some restaurants won't make it but some are actually slaying it during this period of time (which goes widely unreported).
4. Barbers and hair stylists will open back up quickly. I use this as an example of a true "service" job that we can't utilize right now. Or maybe I'm just saying that because I need a haircut - either way, I think it comes back fast. Women will want to get their nails done, get a massage, take their kids to a play place, sit in a café and talk to their friends - all stuff that can't be done right now.

I bet we put 10-20mm jobs back online within 90 days of being "open for business". healthcare will come back the fastest IMO - and I say that as someone who has a front row seat to the "elective" procedure world given my wife's vocation (and her current state of being laid off).

Then you'll also get a massive wave of mortgage refis, debt consolidation, investment back into the equity markets, etc. The equity market side is already saying it realizes the future is better than we anticipated - market overshot to the downside.

Lastly, this doesn't factor in the trillions of dollars worth of stimulus from the Feds. Think of it like this - we had an ~$20 TRILLION dollar economy in the US last year. That's large - and equates to about 1.6 trillion/month. We'll probably pump 5 trillion in over a 90 day (or less) window that we're locked down. That means that we've either made available or injected which comes out to what... ~1.6 Trillion USD/month! Net neutral y/y once the funds actually get into the economy - plenty of money moving around...

Now we're creating a task force to reopen said economy - I think markets will celebrate that:
www.nbcnews.com...

Guess who's saying don't reopen the economy? All of the typical left-wing rags... putting on full display that at this point what's happening has little to do with a virus and more to do with derailing the US economy in influencing the election... it's clear as day:

www.nytimes.com...
www.cnn.com...
www.washingtonpost.com...

Last point (for real this time)… the fears about the travel and leisure industry are overblown IMO. "No one will travel anywhere!" BS. I personally know at least a dozen people who have been actively deciding on their summer vacation plans, day trips, flights to see family, etc... they can't wait to get back out and about - and they figure they'll scoop up some deals along the way.

It won't be tomorrow, but barring a major and unforeseen negative development regarding Covid - I bet you see material improvement to the economy on all fronts in the next 60-90 days.

Remember, this isn't like other economic contractions or bear markets - this one was 100% self-imposed, we 100% know what caused it and have the power to "reopen" very much differently that we have with other recessions or bear markets. That's a little discussed but very impactful point if you think that through....

What say you, ATS?

a reply to: EnigmaChaser

I dont know if everything is going to a rosey and cheery as you explained it. I mean they are bussiness and I am mainly meaning restuarants and also bars that we might not see again. A staple here in Seattle for hair cuts Rudy's barbershop recently filed for bankruptcy. www.kuow.org...

And there are probably some bars out there that won;t be able to come back, I dont know I hope you are right but I am not that positve that we just get to hit the rset button.

I hope you are right because I need a hair cut as well. HA!

I think your right, one of the things I've heard talked about on the news, are the reports being so shocked at the huge numbers filing for unemployment in the last few weeks. How it's record breaking beyond belief! Were doomed!

Duh, we know the exact reason. And its temporary. Sure it may take a few months to get back up to steam, but I think we'll be fine by late summer.

a reply to: EnigmaChaser

Ok, did you forget the rest of the world?

THIS is where one of the biggest problems lies imo. Only thinking in little boxes.

The ramifications of what is STILL happening won't be understood for a long time.

My sad feeling is that many small businesses won't just go back to doing what they always have as it is already too late for them and many people will be working for the huge corporations, the governments, the emergency and healthcare services, the armed forces and the likes.

The ones Trump has been praising in his daily speeches.

BIG BROTHER will get bigger and those who don't give a damn will suck it up double good while still buying crap from China to fulfill the need for greed.

What you say above may be great for the U.S. but when the U.S. doesn't consider the rest of the world who will care about the U.S.?

Good luck.

originally posted by: nerbot
a reply to: EnigmaChaser

Ok, did you forget the rest of the world?

THIS is where one of the biggest problems lies imo. Only thinking in little boxes.

The ramifications of what is STILL happening won't be understood for a long time.

My sad feeling is that many small businesses won't just go back to doing what they always have as it is already too late for them and many people will be working for the huge corporations, the governments, the emergency and healthcare services, the armed forces and the likes.

The ones Trump has been praising in his daily speeches.

BIG BROTHER will get bigger and those who don't give a damn will suck it up double good while still buying crap from China to fulfill the need for greed.

What you say above may be great for the U.S. but when the U.S. doesn't consider the rest of the world who will care about the U.S.?

Good luck.

Don't need luck... look at the MSCI World Index over the last two weeks... ACWI index is you really want to get broad in your view (or watered down, for that matter)…

Lastly... do you think the US leads the global economy or the balance of the world ex-China? US does... while that's marginally less true today, it's still true. A healthy US or healthy US and Chinese economy will drive the balance of the globe.

For instance... where does the state of California ALONE fall in ranking of top 20 economies globally? You should Google that....

Never mind the commentary out of Austria, Sweden, Germany, Denmark, etc. about looking to reignite their economies....

If you think we're dealing with a dead cat bounce here I think you're sorely misguided... could we get some chop on the investment front? Sure, but that's always true... trend is up, not down from here.

a reply to: EnigmaChaser

California would be a bad example, as they were running in the red and having cities bankrupt before the virus...

As for looking at indicators, look no further than oil futures.

You know, the dirty little industry that keeps economies afloat.

It's toast for a few more years.

So no, this isn't something we are going to bounce back from in a few months.

It actually looks more like a slow slide into oblivion.

originally posted by: nerbot
a reply to: EnigmaChaser

Ok, did you forget the rest of the world?

THIS is where one of the biggest problems lies imo. Only thinking in little boxes.

The ramifications of what is STILL happening won't be understood for a long time.

My sad feeling is that many small businesses won't just go back to doing what they always have as it is already too late for them and many people will be working for the huge corporations, the governments, the emergency and healthcare services, the armed forces and the likes.

The ones Trump has been praising in his daily speeches.

BIG BROTHER will get bigger and those who don't give a damn will suck it up double good while still buying crap from China to fulfill the need for greed.

What you say above may be great for the U.S. but when the U.S. doesn't consider the rest of the world who will care about the U.S.?

Good luck.

I thought before this everyone in the world hates the U.S. So, why should the U.S. give a crap about helping those countries and citizens that openly hated on us before?

Karma's a bitch, huh?

a reply to: nerbot


Yes, and without a US passport (no longer being issued) international travel will be held up in many countries around the world.
My guess is this: If you don't have govt. connections from this day forward, you WILL become a peasant to society. 3rd class slave to your country. We all are becoming slaves to the leaders of the country we live in. Its just now more visible.

originally posted by: American-philosopher
a reply to: EnigmaChaser

I dont know if everything is going to a rosey and cheery as you explained it. I mean they are bussiness and I am mainly meaning restuarants and also bars that we might not see again. A staple here in Seattle for hair cuts Rudy's barbershop recently filed for bankruptcy. www.kuow.org...

And there are probably some bars out there that won;t be able to come back, I dont know I hope you are right but I am not that positve that we just get to hit the rset button.

I hope you are right because I need a hair cut as well. HA!

Individual establishments may not come back; so yes individual people will have had their lives ruined.

But as a larger picture; people aren't going to stop getting their hair cut because they are scared of getting sick.

The star bucks around the corner has a near endless line of cars two blocks wide ... right now ... right in the heart of one of the hardest hit areas of the country.

Service jobs are easy to shut down; they are also easy to reestablish. That restaurant that I love so much but had to go bankrupt won't stop me from finding a new restaurant I will love so much. Lots of business going under is tragic; but to be an entrepreneur after the "all clear" will be epic.

I worry more about the tuns of debt we are taking on. We will be paying for that for a long time no matter how good or bad the economy is in 6 to 12 months.

a reply to: EnigmaChaser

The economy will bounce back much better than in 2008. The collapse at that time was symptomatic of bad business practices and legislation.
This time is much different..
Still going to take some time but it will recover faster.

originally posted by: nerbot
a reply to: EnigmaChaser

Ok, did you forget the rest of the world?

Which part of the world are you referung to?

The parts that have been working in sweet shop conditions for the last three decades? Where simply going to work could be a death sentence?

I don't think a temporary disaster is going to stop these people from going back to work. In fact I wouldn't be surprised if they run circles around the west who have the luxury to play "woo is me" a lot longer.

originally posted by: American-philosopher
a reply to: EnigmaChaser

I dont know if everything is going to a rosey and cheery as you explained it. I mean they are bussiness and I am mainly meaning restuarants and also bars that we might not see again. A staple here in Seattle for hair cuts Rudy's barbershop recently filed for bankruptcy. www.kuow.org...

And there are probably some bars out there that won;t be able to come back, I dont know I hope you are right but I am not that positve that we just get to hit the rset button.

I hope you are right because I need a hair cut as well. HA!

I think you're right that some small businesses won't make it. That's likely true - but that's also true pretty much all the time and I think people lose sight of that in an environment like this one.

Said another way, "small businesses" that aren't run well will have a hard time right now. No doubt. I feel for those people because getting a consultant to come in and actually help them understand their business is expensive and most small business owners don't have the capital or see the value in paying someone to tell them what they're doing wrong (And they do lots of things wrong...).

Personally, if I were a small business owner I'd stop freaking out and start thinking about how I'm going to capitalize on the grand re-opening of the US economy.

Take restaurants for instance - first bar/grill/restaurant that's fully open/offering specials/having a party/super happy and inviting will SLAY it once we can go back outside... that's my prediction anyway.

We'll see, but I just don't see this as dour as other people do and that's not because I'm a flowery dude... in fact i'm probably old and grumpy beyond my years... but I just don't see the long-term economic fallout that's being predicted...

originally posted by: Lumenari
a reply to: EnigmaChaser

California would be a bad example, as they were running in the red and having cities bankrupt before the virus...

As for looking at indicators, look no further than oil futures.

You know, the dirty little industry that keeps economies afloat.

It's toast for a few more years.

So no, this isn't something we are going to bounce back from in a few months.

It actually looks more like a slow slide into oblivion.

Funny you say that... I bought hard on leveraged crude ETFs and 3x leveraged exploration ETFs a few weeks ago. I'm up about 35% in that portion of my portfolio and now into the green YTD.

Might spike again Monday due to the unprecedented output cuts... we'll see.

But like Buffet has said, "stocks are the only thing people don't want to buy when they're on sale". Rings true here too apparently.

originally posted by: musicismagic
a reply to: nerbot


Yes, and without a US passport (no longer being issued) international travel will be held up in many countries around the world.
My guess is this: If you don't have govt. connections from this day forward, you WILL become a peasant to society. 3rd class slave to your country. We all are becoming slaves to the leaders of the country we live in. Its just now more visible.

First, your avatar is spectacular.

Second, while you're right that we're all sitting our slave chairs/jobs every day I think you're being overly dour.

Remember all the people who said we'd never recover and have the "new normal" after 2008? Fast forward a decade and pre-Vid we were in a better place than we every have been. Literally. It was literally the most prosperous time that humanity has ever experienced globally - more people, more better off than ever.

We've had boom/bust cycles, dropped nukes, started wars, had terrorist attacks, dealt with Ebola/SARS/H1N1, EU debt "Crisis", yada yada yada..... capitalism will soldier on....

originally posted by: Bluntone22
a reply to: EnigmaChaser

The economy will bounce back much better than in 2008. The collapse at that time was symptomatic of bad business practices and legislation.
This time is much different..
Still going to take some time but it will recover faster.

The fact that we know precisely and without question what caused our current state of affairs is very significant. Extremely significant, IMO.

There's still debate to this day about what caused 2008 (I still buy the FAS 157 argument) but there is no question today.

It was self imposed, over a very specific subject that we are all aware of and can quantify... that's literally unheard of in market history.

Is it going to "Come back" in a week? No. But you'll add literally millions of jobs in the healthcare and service industries alone overnight - that's also unheard of - and going widely unreported and discounted.

Everyone should remember that the markets move on the difference between expectations and reality. That's why you got a 35% panic sell off, and a 25% run in the last two weeks. market over corrected, realized we're now talking about getting back to work, the death toll/disease isn't as bad as we (or rather the masses) thought and markets are pricing in better days ahead.

One can vilify the financial sector all they want - and there's certainly justification for that vilification in many, many, many instances - but don't forget some extremely smart, unemotional and disciplined people run eye-popping amounts of money for a living.... and I'm not talking about your local broker. These people have stones of steel and live under pressure most people can't fathom - they take it very seriously and aren't playing around.

Markets will move higher well before the economy is "all clear" - no different than 2008 or the tech bubble...

originally posted by: Lumenari
a reply to: EnigmaChaser

California would be a bad example, as they were running in the red and having cities bankrupt before the virus...

As for looking at indicators, look no further than oil futures.

You know, the dirty little industry that keeps economies afloat.

It's toast for a few more years.

So no, this isn't something we are going to bounce back from in a few months.

It actually looks more like a slow slide into oblivion.

mismanagement of their spending doesn't change the size of their contribution to global GDP.... the fact they are easily in the top 20 of global GDP for COUNTRIES and still can't handle their spending is just dumb. But, that's how they roll.

a reply to: EnigmaChaser



Well , I Think that is Not Fast Enough . This Should NEVER have Happened ..........

You didn't include travel which is a huge industry. That one will take a very long time to resume.

What will happen is a stagnation of the economy due to the uncertainty. Uncertainty is a business killer.

Just like the movie the Purge, business will adjust to whatever situation is created - they just need to know what's going to happen.

I firmly believe even if we all had to stay in forever, the economy would eventually recover. Industries would be created around isolation. Just like 9/11 originally shut down the air travel related jobs, they came back and thanks to TSA there's even more people are employed at the airport.

But no adjustments and no recovery will be made until all of these "I don't know"s go away.

Well ok,

You have to have money to get a haircut. You have to have money to order a burger.

What you are not considering is that the unemployment sector has imploded. People are not getting their money and the bill's are due.

We will see I guess.

a reply to: EnigmaChaser

I used to own a telecommunications business. It was quite successful and very lucrative, until my vendor, the telephone company, became my competitor. The birth of voice mail killed my business.

When the big boys have you by the short hairs, the only thing you can do is cry, "Uncle". Many small businesses will be gobbled up by the big companies at the hands of the government. Those small business loans they are forcing small businesses to get strapped with, aren't working as smoothly as promised, and problems are coming not just from the glitches. Doors are being closed and they won't reopen.