Predictions are tough, especially about the future

What’s coming after the virus? What will the economy and job prospects look like after this is all over? How long will things take to recover?

Listener Barb tries her hand at some predictions. But these are not just pulled out of the air. She draws from her own experiences as well as from contacts she has. Take a listen and see if  you agree. If you don’t (or even if you do), let me know what you think as well.

Mentioned links:

Dan Quayle [Wikipedia]

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Show transcript

I’ve known listener Barb for a few years now, mostly through TV show podcasts that I’ve co-hosted, but our interest and shared values in politics have coincided as well. You’ve heard her contributions to this show in the past, but recently she sent me a long email about her thoughts about what happens after this pandemic is over.

In a subsequent email, she reminded me that her predictions on TV show plots have a bad track record, but those events progress at the whims of writers of fiction. Real-life events can be predicted a little better based on current events and history, and Barb has some contacts that she refers to in order to get better information. But still, there are so many variables.

So I turned over this episode to Barb. It’s one person’s ideas, and I’d love to hear your idea as well.

Hey Doug —

I have a few thoughts on this —

The “experts” are saying that this will be a fast recovery.  I don’t think so.  Not to be a “negative Nellie,”  but there are looming factors on the horizon that give me pause.

Too many small businesses can’t stomach the burden of a loan and get back on their feet.  I’m hearing stories of restaurants and stores already notifying their customers that they are closing – forever.

Indeed, I fear that many storefronts on Main Street will be selling for fire-sale prices in the coming months. If you can get pick-up or delivery from your local restaurant during this time, go ahead and give them some business. It may help to keep them afloat until the other side, but for many stores and other businesses, this is going to be tough.

Making it tougher are some small businesses for which the increased unemployment that their employees are getting is more than they would get going back to work. Unemployment is not supposed to be a disincentive to work; it’s supposed to be something to tide you over until you can work. But Congress was over a barrel to get a relief bill passed, so Democrats insisted this go through. This may actually increase government dependency, though that’s probably what the intention was.

People will not be flying again anytime soon, nor will they be attending sporting events with large crowds.  Cuts in the aviation industry (both commercial flights and their suppliers) will be coming in the next two quarters and will be deep.  My friends and former co-workers in the industry are telling me that it is going to be very ugly.  The media has done a great job of soaking us in fear – and we have let them do this.

All these unemployed individuals are going to have a hard time finding a job.  With no wages, no ability to pay a mortgage, the housing market will begin to fall.

The tourism trade may sound like something that only the rich will miss, so no big deal. But those who work in the tourism industry – hotel clerks and cleaning crew, flight meal suppliers, workers like that – are not rich. They will be the hardest hit, not the rich.

Will the relief packages from the government mitigate these problems? A little, but yeah, we’re not out of the woods yet, economically.

Barb continues:

I suspect the Democrats will sweep in the November elections, taking the presidency and taking back the Senate while retaining the House.  Traditionally, the market doesn’t like it when the same party holds the reins in the government, and stocks suffer.  With the push to rollback this administration’s initiatives and implement their promised high cost social programs, increase taxes, and increase regulations for business, the market will suffer another collapse and the country will go firmly into a recession further hurting the middle class. This time there won’t be the ability to provide the trillion dollar bailouts we’re seeing today due to the debt level.  It will be broad and deep across all aspects of industry and service institutions.  Nothing will be untouched by new laws and policies.

La-la-la-la I can’t hear you. I really want Donald Trump picking the replacement for Ruth Bader Ginsberg, not Joe Biden. I really want this prediction to be like your TV show plot predictions, Barb. But you’ve done your homework on this, and I have to agree that for now, the true toll this has taken on our economy is yet to be realized. It’s being masked by the government spending, but even now businesses big and small are closing down or filing bankruptcy. There’s going to be a lot of government intervention with lots of unintended consequences, like that disincentive to work I mentioned.

I also think we will have a “constitutional crisis” during this period in which the VP takes over for the President.  Anyone with a parent who either has gone through or is going through dementia knows the signs, and I’m no doctor, but I’d be willing to bet that Joe Biden is on that horrible and long trip.  I’ve had a number of friends who have been through this and have made comments about the former VP’s “gaffes” and behavior.  The job of President ages the best of individuals.  It will have no mercy on one who is suffering from the terrible grip of dementia.  My guess is that we will have a new President at roughly the 2 year mark.  I think the Democratic “leaders” have seen this and believe the same thing, and this was why so many candidates dropped out around Super Tuesday.  The fight within the party will be who will be the VP candidate.  I said more than a year ago that I believed it would be Kamala Harris and I still think that could be the case.  Yet now they need to determine which VP candidate would have the highest “electability” quotient in another 4 years.  It certainly wouldn’t be Stacey Abrams!

No, Stacey Abrams is still the governor of Georgia in exile. Her claims of Republican voter irregularities in her race failed to realize that the areas she was concerned about had election boards run by Democrats. But anyway, aside from that, I totally agree that the VP pick will need to have presidential aspirations. If Joe Biden was a Republican, perhaps with the name Dan Quayle, his gaffes would be all over the news. (If you don’t get the Dan Quayle reference, there’s a link in the show notes to his Wikipedia page. Look at section 3.2.2, Gaffes.)

Barb now talks about the economic recovery.

I don’t know if the Democrats would be “punished” the next major election cycle in 4 years (they’ll still be blaming everything on the prior administration) or whether it will take 6 – 8, but it will happen again. History does repeat itself.  I’m guessing this downturn will last for about 5 – 8 years before we begin to see the light, depending on the damage done with new laws and taxes.

Many economists suggest that some of FDR’s measures to stop the Great Depression actually extended it, so yes, I think what emergency steps are taken will definitely affect how long this lasts. And again, I really hope we recover faster than 5-8 years, but it is easier to destroy something than it is to rebuild it. I’ve heard depression predictions elsewhere as well, so you may very well be right.

Staring into this abyss, my advice to people would be to find a job as quickly as possible, no matter what it is and begin earning cash again.  Make sure you save enough cash for a 12 month emergency – not just 6 months as recommended by so many financial experts.  Postpone large purchases, keep that old car running, and if you do need something major, negotiate, negotiate, negotiate.  Go back to church.  Help others in need.  Be grateful for what we have.

We’ll get through it.  We always do.

But as you said, it may take a while; longer than some of us think it will, including me.

Filed under: Coronavirus (COVID-19)Economics & TaxesMedicine