Adam in Riverside California asks,
Hi Victor,
I hope you and your family are safe and well. I enjoy listening to your daily podcast. Thank you for educating your listeners!
The COVID-19 pandemic will certainly have a deep and lasting impact on our society. Covering nose and mouth in public is now the norm. Fewer cars on the road due to shelter in place orders has led to a reduction in carbon emissions. Having a reliable internet connection at home has become a necessity for mom and dad to work from home while the kids are attending classes. If we fast forward a year from now, what behaviors do you see changing?
Thanks,
Adam
Well Adam, this is a great question. As always it’s hard to forecast the future. But I see a few trends that seem obvious to me. This is a huge question and I won’t be able to cover too many aspects in just five minutes, so I’ll touch upon a couple of them.
The period of social isolation is going to be required for more than just a few weeks. Government leaders are going to try and re-open the economy as quickly as they can. China has attempted to re-open their economy and has almost as quickly tightened the restrictions when they saw cases of Covid-19 rising again. The process of re-opening the economy will take many months and will probably only happen fully in about 18 months from now.
When any behaviour happens with enough regularity and for long enough, new habits are formed. It’s been more than two months since I’ve been to the gym. Will I renew the gym membership when this is all over? I’m not entirely sure. I suspect that I will have formed new workout habits and once those new habits are firmly in place, the gym won’t seem as compelling, or maybe it will. It’s too soon to say.
A year from now, we will not be through this period of disruption. We will still be managing the disruption and some industries will be attempting to emerge from the shutdown.
The fact is, we will not see a return to what was. What emerges will be different. We will see a new normal.
I suspect that we will see changes that are driven by supply chain disruptions. For example, the way people shop for food is already changing. It used to be the case that the peak hour at the grocery store was traditionally 5PM, just before dinner time. Now that peak time is in the morning when the store opens. A year from now we will not be out of the woods with Covid-19. There will still be shortages of certain items and the competition for those scarce items between consumers will continue to be a point of social friction.
We will see a large percentage of the population still struggling financially from this disruption. That means austerity, spending less, and only spending on essential items. Businesses that rely upon luxuries will struggle as demand for those products will be among the last to materialize.
I predict that the cocooning of households that has been trending for the past 30 years will continue to become even more acute.
There are a number of people who are used to traveling extensively. I’ve traveled about twice a month for the past 15-20 years. Now that is zero of course. So much that has been done in person with travel will be increasingly done using technology. That’s both a problem and an opportunity. Those who choose to travel for business will have a distinct competitive edge compared with those who merely video conference.
How many people will eagerly jump on a plane in a year even when the airlines are saying that it should be safe to travel? How many people will book a cruise or go to a conference? I predict that these sectors will be slow to re-emerge after this is all over.
We will no doubt see an even greater reliance on internet communication than ever before.
