Even if you hadn’t previously used Zoom, the chances are that you are now very familiar with this online meeting app. You have probably even explored how to change your background picture to make it appear that you are running with the bulls in Pamplona, or hanging with the Tiger King. My prediction is that because we have become so comfortable with this application that even after “normalcy” returns we will continue to use it at a much higher frequency than we did before the pandemic. The potential consequences are a reduction in business travel and the further consolidation of the already hurting airline and hotel industries. Remember you heard it here first. Maybe.
Are we about to see a crash in the commercial property market?
Due to the COVID-19 situation, my friend, Tom, who works in the IT industry, is working from home for the first time. He told me that even after the restrictions are lifted, he will continue to work from home, because it’s convenient and he can get more done than when he’s in the office. He isn’t alone – many more companies will implement “working from home” as a permanent option for their staff because they are finding that their employees can be very productive in the home environment – and with the biggest ticket item for non-employee spending being the overhead cost of maintaining the workplace, the demand for office space is likely to decline, with a concurrent decrease in commercial building rental costs and sale prices. It’s unclear if this will affect residential housing prices in the suburbs or downtown, but there are big consequences for city taxes. If you are permanently working remotely, you pay taxes in the same city that you live in. Good news for the suburbs, but not so much for the cities where most of these jobs will migrate from. In the short term we could see huge budget deficits in the urban metropolises, as their spending outstrips their income. Eventually the two will balance as tax rates increase and spending decreases, but there will definitely be some pain.
Why using your car less could lead to a reduction in global terrorism.
Reduced commuting will also have an effect on gas consumption and therefore emissions. NASA’s Goddard Space Flight Center in Greenbelt, Maryland, has created maps and images that show how COVID-19 reduced global air pollution. Across the world, greenhouse gases saw a dramatic 17% plunge during the Corona Virus lock down, driven in part by US automotive passenger traffic declining around 50%. Whilst travel volumes will begin to rise, it’s almost certain they won’t return to pre-virus levels, for reasons already mentioned. The consequences are that fuel consumption will reduce, and so will pump prices and profits. Whilst this is good news for consumers, I believe one of the unintended consequences could well be that as the oil producing nations in the Middle East start to see a decrease in revenue, that the funding some have been giving to terrorist groups will also decrease, leading to a reduction in global terrorism (I bet you didn’t see that one coming!).
Reduced car travel will likely also see reductions in downtown parking spaces, lower spending on automotive maintenance and, in the longer term, car sales, as owners take longer to rack up the miles before they change their vehicles. It remains to be seen what effect this will have on the automotive manufacturing industry, but it is unlikely to be good news.
Even before the virus hit, there was plenty of impetus from the White House to reduce our reliance on foreign manufacturers for the supply of essential goods into the US. With the supply chain breakdowns that we saw during the pandemic affecting everything from hand sanitizer to respirators, expect to see an even greater emphasis on bringing manufacturing back into the USA, in an effort to reduce the length and complexity of supply chains.
So much for the possible economic effects.
What might be some of the unintended long-term social effects of the virus?
Most obviously, increases in working from home will mean less human-to-human interaction, but what are the consequences of that? Although there is no firm data yet, there is plenty of anecdotal evidence that the enforced social isolation required during the pandemic, led to an increase in attempted and actual suicides. In many counties the rate of suicide was actually higher than deaths due to COVID, causing medical professionals to call for an end to “safe in place” orders for fear of one pandemic causing another. Might this trend continue if more people, especially those that live alone, continue to lose the normal socialization of working together in an office?
During Corona Virus, many larger churches started taking their services online. With a lot of uncertainty and fear in the world, their congregations, along with lots of lapsed church goers, headed to their couches where they could watch services from the comfort of their own home. It is reported that on average, online attendance increased 8% over in person attendance from the month prior to the lock down. Most of the churches that offered an online service, had live services that were recorded, and then made available to view at any time. This provided the opportunity for people to watch a service at their own convenience, not just on a Sunday morning or Saturday evening. Unfortunately for the individual churches, giving was also dramatically down during Corona Virus, with many churches recording a 30% decline in offering. If congregations continue to require the flexibility of online services, whilst simultaneously reducing their giving, this will cause many churches, especially smaller ones, to close, or at the very least reorganize themselves into more appropriate structures for the digital age.
So let’s have a show of hands. Who has used a grocery delivery service for the first time in the last 3 months? The burgeoning food delivery companies Instacart, Shipt and Amazon Food Delivery are some of the few companies that actually saw top line growth during CV-19. Whilst the primary reason that most customers used these services was so that they could limit their interactions with other potential infected individuals in stores and supermarkets, the ease and convenience that these services provide will probably result in a permanent uptick in business for them. During COVID, a combination of restaurants being closed and more time being available for preparation and cooking in the home caused a mini renaissance in “homemade meals” – only time will tell if this will be an ongoing trend or if we will return to eating out 6 times per week (yes you read that correctly – before COVID hit the average American ate out 6 times per week! At a cost of around $2,500 per year), with the knock-on effect that will have on the already battered restaurant and bar industry, who are going to have to deal with social distancing requirements limiting their capacity at least through the end of the summer.
So, these are some of the things that we ponder on at Jager when we are not actively engaged with clients. If you think your business could benefit from having some new ideas, or you are just struggling coming to grips with the new normal, please give us a call at (440)-385-6737 and let us do it together.