[doh]

This is just a personal opinion, but I think ~15% unemployment peak is far too optimistic.

I believe that 50-75% of restaurants will never reopen. 20-35% of small to mid-size hotels, venues, spas will declare bankruptcy within this year. Both employ a lot of people.

So I'm afraid the number is going to much higher, maybe even double.

[tachyonbeam]

I know it's really not PC to talk about this (how dare you value money over human lives!?), but at what point does the economic damage this causes become too much? 15% joblessness would be ~50M americans. If just 0.1% of them commit suicide as a result of losing their jobs or businesses, that would be 50,000 dead.

Maybe there's some kind of intermediate between forcing everyone to stay home and not having any mitigation measures in place whatsoever? Maybe a midway strategy would be less destructive. Protecting the economy isn't just about protecting the rich. The rich will be fine, they will get huge government bailouts (zero-interest loans). However, as you point out, a large percentage of small businesses will never reopen. If anything, this crisis is hugely benefitting Amazon & co.

[kazen44]

the problem with your statement that NOT doing any of the counter measures (like self isolation) would result in the overloading of the healthcare system and many people dying. (heck, the healthcare system in the US seems to be overloaded already).

When you have no further option for healthcare because the system is broken and overloaded, why would going into work make any sense if it resulted in either an period of illness with structural symptons or even death.

In times of crisis, people want food on the table and a roof over their head, if the cost benefit of doing legal work and following the rule of law turns negative, people might aswell just steal food and stop paying rent, who is there to stop them?

[koheripbal]

Because the vast majority of people under the retirement age resolve the illness in a week or two without the need for healthcare assistance.

The people who need to be locked-down are those over 60 - not the entire population.

[tachyonbeam]

There are also measures that can be taken that are not a complete lockdown, eg: limiting public events, temperature monitoring in workplaces, etc.

[usaar333]

We're not going to hold stay at home forever - even Wuhan is exiting lockdown (after 2.5 months).

[doh]

Unfortunately not really https://www.bloomberg.com/news/articles/2020-04-02/chinese-c...

[tachyonbeam]

I mean, I hope not, it certainly doesn't seem realistic to do so, but I see people pushing for multi-month lockdowns until mid-summer.

[doh]

I think the difference here is that virus bring death to us. Suicides can be reduced if governments create the correct stimulus.

Again, it's super easy to criticize when not in charge, but my reaction would have been to shut down any means of travels to and from the country, shut down the country for 45 days completely, slowly restart the economy from crucial business to less and introduce couple of strong measurements to compensate workers for lost income.

[ghettoimp]

Hard to say.

At start of year, situation normal, the economy we had was unsustainable. We were collectively waging war on our environment and winning. Folks mostly had jobs, which was good, but income inequality was nuts and lots of jobs didn't pay a living wage. Housing costs, healthcare and college were out of control.

In short, the world could really use a correction. The pollution reduction from this shutdown has been dramatic and wonderful.

This will hit the economy very hard. The rich will be livid and will push hard to return to business as usual. The rest of us will suffer terribly. Maybe so terribly, and in such numbers, that we have to address it. Maybe we'll come out the other end with something more sustainable for everyone.

(Probably not.)

[doh]

> Maybe so terribly, and in such numbers, that we have to address it

That’s unfortunately my reading. There are stores boarding their storefronts in LA [0]. Very very premature but gives you a glimpse into the believes of some.

I’m sure at the end we will come out of it in better place that we entered it, but I’m dreading the path we have to take to get there.

[0] https://mobile.twitter.com/tmz/status/1244412908273991680 (I know, I know, it’s TMZ)

[PeterisP]

After this is over (whenever that is) we expect people to resume eating out and traveling. I agree that it's likely that 50% of restaurants and 25% of hotels/spas would become bankrupt and shut down, but that does not mean a 50% / 25% reduction of employment; I would expect most of the bankrupt restaurants and hotels/spas to be immediately replaced with new ones, employing much of the same people and renting much of the same premises (only cheaper), and ran/owned by the same people. In such an environment, the main impact of a restaurant going bankrupt is that the creditors and investors of that restaurant lose their capital, but it can reopen after a reorganization when there's demand once again.

[doh]

You are of course correct. There will be a bottom and then a recovery.

The speed of recovery will depend on how much liquidity will be available in the market. And I believe it’s going to be quite low.

You see, all of these business depend on discretionary income and after the shock to the people they will sit on any penny or they will not have it themselves.

I believe we will eventually get out of this but my timeline is 3-5 years. If people are unemployed for more than few months their prospects drop rapidly. People with no options produce ruthless competition that pushes salaries down producing wider inequality and limits the discretionary funds needed to spend in those establishments in the first place producing quite a vicious circle.

[PeterisP]

I agree that wider inequality is a likely outcome.

There will be people who won't be able to spend anything because the depression drained them absolutely, and there will be people who are accumulating income that they can't spend due to the lockdown, and will have the funds to resume all the postponed vacations with vigor as soon as they can - in the aftermath, tourism will be cheap for those who have discretionary funds for tourism, because many won't, and the service industry will be agressively competing for any income they can get while having a cheap workforce.

[shostack]

So much of this depends on how the administration handles this. I don't have great confidence based on how they've handled things so far.

[doh]

Very true. I spoke to a few economists and they believe there are going to be two or three waves of CARE ACT-like packages.

It's easy to criticize the government without having to bear the responsibility but I wish they did this much earlier, with more force to bring confidence to the people rather than markets.

I spoke with a branch manager at a bank day before they announced the extended timeline for shut down up until end of April. She was cheerful because she believed that this will be over in two weeks. I tried to gently tell her that I believe we are looking at months (two at minimum), not weeks of lockdown and even that might be very optimistic. She didn't take it well.

People are confused and scared. I do wish the govs (local and federal) would be the leaders everyone needs them to be, but unfortunately, that's not yet happening (there are some exceptions, but very few unfortunately).

[redisman]

Probably most small(and medium, and big) businesses can hold on for a month or two at this rate but failure rate is going to approach 100% as time goes on.

[unethical_ban]

Half of all restaurants in the US will not reopen? Multi-year depression?

[doh]

That's my expectation, correct. I'm definitely not the only one [0]

[0] https://www.atlantamagazine.com/dining-news/chef-hugh-acheso...

[amiga_500]

What happens to all this commercial rental space? Rents are going to drop through the floor, and any business who signs up will have dramatically lower operating costs than in January.

[doh]

Landlords are scraping by already. We have multiple offices across the World and our landlord begged us with tears to pay the April rents.

Commercial real estate will be impacted as heavily as any other business.

[usaar333]

Oddly enough, here in the Bay Area (SIP 2.5 weeks in), most restaurants seem open. Take-out is a thing after all.

Travel/conference focused items (hotels, venues, cruises) are much more affected.

[brewdad]

A bunch of Portland restaurants found that they were losing money faster by offering takeout versus simply closing their doors completely. Obviously, a number of factors play into whether this is true for any given restaurant but takeout business isn't necessarily a panacea.

[marricks]

That is interesting but probably not indicative of elsewhere.

Portland OR is a bit techy and boogie but even then it has still been hit HARD. The places I frequent all have had drastically reduced hours and business. I haven’t heard of any closed for good but more and more and just on a long hiatus or boarded over...

[doh]

I live in LA. It's not that different. I did talk to some owners of the restaurants and they said that their revenue is down by around 80% even with takeouts. Most people are not spending money. So it's something, but hardly enough.