April 9, 2020

Ever since I watched that Linda Ronstadt video the other night I’ve been directed to the fabulous (and underrated) music of the late, great Warren Zevon, who created the kind of music the likes of Steely Dan (there I go again!) could only hope to create in their wildest dreams. And it’s in this time of national crisis that Zevon’s timeless lyrics in “Mohammed’s Radio” captures the essence of the times:

Everybody’s restless and they’ve got no place to go
Someone’s always trying to tell them
Something they already know
So their anger and resentment flow

Don’t it make you want to rock and roll
All night long Mohammed’s Radio
I heard somebody singing sweet and soulful
On the radio, Mohammed’s Radio

You know, the Sheriff’s got his problems too
He will surely take them out on you
In walked the village idiot and his face was all aglow
He’s been up all night listening to Mohammed’s Radio

Don’t it make you want to rock and roll
All night long Mohammed’s Radio
I heard somebody singing sweet and soulful
On the radio, Mohammed’s Radio

Everybody’s desperate trying to make ends meet
Work all day, still can’t pay the price of gasoline and meat
Alas, their lives are incomplete

Don’t it make you want to rock and roll
All night long Mohammed’s Radio
I heard somebody singing sweet and soulful
On the radio, Mohammed’s Radio

Great Lindsay Buckingham and Stevie Nicks background vocals.

But I’ve been thinking about when this is all over what the economic landscape is going to look like – not from a micro standpoint (although the changes will be significant) – but at a macro level. I certainly don’t know when the current stay-at-home / economic shutdown will end, but no matter when it does I think it’s pretty clear that things are going to look far different than they did just a month ago. And while I think changes will be noticeable in a 3-4 months’ time, what I’d like to do here is post some thoughts about the economic recovery I think will start to be readily apparent (and longer lasting) within the next year or so. This is kind of thinking out loud stuff, so I welcome any thoughts y’all might have.

1. This Larry Schweikart Twitter thread (read the whole thing). I think most folks (primarily because of the mainstream media and its reckless and reprehensible coverage of President Trump’s handling of this crisis) don’t understand just how much the President and his team have “got this”. These guys a far smarter and more savvy than the media will ever give them credit for. This is something you will want to keep in mind as the President’s “Economic Recover Task Force” takes shape over the next week. These guys are certainly not going to destroy the economy like Dr. Fauci and his penchant for attention through non-stop alarmist statements and prominent Democrats would like to do. These folks want to use the virus as their their way to stop Trump’s reelection in November. It won’t work.

2. Hard-goods stores like hardware stores and home stores are going to be a thing of the past. Think about it: is there anything your local home store or hardware store sell have that you can’t order online from Amazon or Walmart? While I’m sure the Lowe’s and Home Depots of this world will survive (they simply have too much variety and services to not), the local hardware, home goods, and specialty stores will be a thing of the past.

3. Clothing stores are going to be hit and miss. Why? Because for women (and I don’t think I’m being sexist about this at all) going clothes shopping is as much of a social activity than anything else. Sure, there are gazillions of catalogs out there, but the whole social aspect of clothes shopping – thumbing through the racks for deals, trying clothes on and the like is not going to go away.

4. That being said, your average shopping mall is a dinosaur; I would expect a failure rate as much as 80% over the next year or two at most. The fact is, shopping malls were really nothing more than excuses to get out and spend more money on items than you would normally do because “they were there”. Expect many, if not all, of the specialty stores you would normally see in malls to go fully online and catalog or close up shop altogether. Hopefully that will include the likes of the Cheesecake Factory, which produced lousy food at an exorbitant cost simply for its location. If this shutdown has any silver lining whatsoever, it will be the end to the CF’s loud atmosphere, lousy service, and overpriced food. That would be a good thing.

But I digress.

5. Back to the shopping mall. Why? Because it’s just like when I gave my mom and dad their first computer back in Windows 95 days. I brought the computer over to them, installed it and fired it up, then showed them how to use e-mail and the internet. I remember clearly Mom saying, “Honey, but we don’t need a computer.” Three months later, she’s checking e-mail first thing in the morning and connecting up with family members and friends all over the place, sharing photos and the like. I remember sometime after that them losing their internet for a couple of days and Mom telling me how disconnected they felt. This is exactly what has happened during this shutdown: even the most nervous and hesitant of folks when it came to online buying are doing it, and they’re never going back.

6. Which is why I expect many of the specialty stores you would find in your average shopping mall to either go out of business or transfer all of their business model to online shopping. Sure, some of the malls and these businesses will continue to operate in different ways we can’t imagine at this time, but it will be on a much smaller basis – as I say, the shopping mall concept as we know it is dead.Which means lots of folks out of work and needing to find new lines of work.

7. Those companies who have shifted their work force to work from home are going to discover two things: (1) they are getting the same kind of productivity (or near that) from a remote workforce, and (2) seeing the true dead wood and deadbeats of the company revealed for what they are. I would expect to see quite a few companies of all kinds reducing their physical footprints in order to what IBM started doing (and was ridiculed for) back in the 90s by creating smaller offices with public pods and workstation areas where folks can come in, say, once a week for meetings and reduce their costs associated with office space rent.

So what to do with all that empty real estate and the jobs lost because of the switch to online retail? I will offer some thoughts on that in my next installment.

Filed in: Politics & World Events by The Great White Shank at 01:10 | Comments Off on What Comes Next? (Part 1 of 2)
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