A dear reader in Florida asked the question of what changes may be forthcoming in consumer behavior as a result of Covid-19. To be honest a question like this is nearly impossible to answer at this point in the history of the pandemic. As I read more articles and ponder the question I come to realize many others are trying to answer the same question. So I’ll begin at the beginning by expanding on the vague comments I made in my post Less Worried About Tulsa (for now). In no particular order the following are my expanded thoughts on what I perceive to be permanent changes in consumer behavior.
Our food supply chain issues are far from over. Meat and dairy consumption will decline and retail prices will increase. The primary reason for the decline in consumption will be the millions of unemployed who can no longer afford to eat meat.
The juxtaposition of images in the news of farmers destroying crops and dumping milk with empty supermarket shelves or hungry Americans lining up for hours at food banks tells a story of economic efficiency gone mad. Today the US actually has two separate food chains, each supplying roughly half of the market. The retail food chain links one set of farmers to grocery stores, and a second chain links a different set of farmers to institutional purchasers of food, such as restaurants, schools, and corporate offices. With the shutting down of much of the economy, as Americans stay home, this second food chain has essentially collapsed. But because of the way the industry has developed over the past several decades, it’s virtually impossible to reroute food normally sold in bulk to institutions to the retail outlets now clamoring for it. There’s still plenty of food coming from American farms, but no easy way to get it where it’s needed.
Online education will become the standard operating model for higher education. Thousands of colleges and universities will go belly up. Professor Galloway at NYU says it’s simple math.
The math here is simple, and similar to any product where the consumer is constantly weighing her options and deciding where to spend her money. The value proposition of college is:
C = Certification (the lane you are put in post graduation based on the brand/school you attended, i.e., a caste system) E = Education (learning and stuff) Ex = Experience (fall leaves, football games, getting your heart broken, throwing up)
Schools charging $50,000/year or more (Brown, NYU) have value propositions that have been rendered untenable overnight. The elimination of the university experience is similar to SeaWorld without killer whales. Yeah, we get it … free Willy, but I’m not paying $450 to see otters and penguins. Also, we’re not paying $54,000 for Zoom classes.
The killer whales (cash cows) of high-tuition prestige universities are international students. We claim we let them in for diversity. This is bullshit. International students are the least diverse cohort on earth. They are all rich kids who pay full tuition, get jobs at multinational corporations, and often return to the family business. At NYU, they constitute 27% of our student body and likely half our cash flow, as they are ineligible for financial aid. We have a pandemic coupled with an administration committed to the demonization of foreigners, including severely limiting the prospects of highly skilled grad students. This means the whales may just not show up this fall, leaving us with otters and penguins — an enormous fiscal hole.
I’ve been working from home since 2006. Way back when I was the oddball. Now almost everyone is WFH. People are looking to leave the large cities. This migration trend will grow over the next few years.
The real estate brokerage Redfin reports that its data of more than 1 million house hunters shows a record 27% of home searchers at its site looking to move to another metro area in April and May.
Homes in smaller towns are seeing an uptick in listing views. Redfin notes that page views of homes for sale in towns with fewer than 50,000 residents saw traffic rise 87% year over year in May. That is nearly four times the 22% yearly increase in page views of homes in cities with more than 1 million residents.
The younger generations will change their behaviors more slowly than older age cohorts. But as more and more younger people get infected and they themselves develop symptoms and/or know someone who has contracted Covid-19 behaviors will start to change quickly.
In a Twitter thread, University of Florida bio-statistics professor Dr. Natalie Dean offers three possible explanations for why the median age of cases might be falling, and what data signals we should look for.
If it’s simply a matter of more testing, hospitalizations should not increase, and test positivity should decline or hold steady. In the South and West, positivity rates appear to be rising, but regional numbers can mask very different state trends. In Texas, Florida, and Arizona, test positivity and cases are both rising; in California, by contrast, new cases are way up but the positivity rate has remained at five percent in June, and in Georgia the positivity rate is up just two percentage points while testing is up.
If “elderly people are more cautious,” then cases, test positivity, and hospitalizations should decline.In the Northeast, tests are way up, positivity is way down, and new cases are flat. In New Jersey, new daily cases are down to 10% of April peaks, and hospitalizations have dropped precipitously. New daily cases in Connecticut have been in the double digits for the past couple weeks, and hospitalizations are down to 124 as of June 23 from over a thousand in mid-May.
If younger people are less cautious—or if they’re more exposed as young service workers return to their jobs—cases, test positivity, and hospitalizations should rise. This is happening in Texas and Arizona. Cases and test positivity are up in Florida; statewide hospital data was only available for a few days in May before the state removed it from public view, but in Miami-Dade County, hospitalizations increased from 601 to 776 from June 9 to June 22.
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