The collapse of economic activity in 2020 from COVID-19 has been immense. An important question is how much of that resulted from government restrictions on activity versus people voluntarily choosing to stay home to avoid infection. This paper examines the drivers of the collapse using cellular phone records data on customer visits to more than 2.25 million individual businesses across 110 different industries. Comparing consumer behavior within the same commuting zones but across boundaries with different policy regimes suggests that legal shutdown orders account for only a modest share of the decline of economic activity (and that having county-level policy data is significantly more accurate than state-level data). While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 of that. Individual choices were far more important and seem tied to fears of infection. Traffic started dropping before the legal orders were in place; was highly tied to the number of COVID deaths in the county; and showed a clear shift by consumers away from larger/busier stores toward smaller/less busy ones in the same industry. States repealing their shutdown orders saw identically modest recoveries–symmetric going down and coming back. The shutdown orders did, however, have significantly reallocate consumer activity away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.
I admit to having a short attention span. My mind tends to wander a bit, sometimes a lot. The reason for my cognitive wandering is usually a question which sends me down yet another path of discovery. So here’s another post in my intermittent series on Post Pandemic Changes in Consumer Behavior
My July 4th weekend will be a quiet weekend. I’ve downloaded the pdf of this working paper to read. I’m hoping for some insights that I might have missed.
For older people, the coronavirus crisis has been an appalling shock. Many can’t travel or see grandchildren. Even buying groceries is a risk. Their life savings are melting as the global economy shuts down and financial markets plummet. The pain may be particularly acute in the U.S., where Americans rely on a retirement system that was broken well before a pandemic dashed it to pieces.
The ING International Survey Savings 2019, the eighth in an annual series, surveyed 14,695 people in Europe, the US, and Australia, and discovered the majority worry about not having enough money in retirement. The findings show that many people are “sleepwalking” into a financial crisis with little or no savings toward their golden years.
The ING International Survey Savings 2019 highlights the difficulties people are facing across Europe, the USA and Australia when it comes to meeting long-term savings goals, such as funding retirement. The survey, the eighth in a savings series repeated annually, canvasses the views of nearly 15,000 people in 15 countries, reveals that six in ten (61%) of non-retirees across Europe worry they won’t have enough money to live on when they retire. This is no surprise when you realise that high shares (27%) have no savings at all. Among this group, two-thirds (66%) tell us they simply don’t earn enough to put anything aside. And many who do have savings aren’t massively better off: 42% in Europe say they have no more than three months’ take-home pay put aside. Results from the USA and Australia are similar.
You can download the full study at this link.
The present standard of retiring somewhere between ages 60 and 70 is not going to be sustainable when half the population lives to 80 or 90 – which is already realistic today – let alone 100 or more. It’s just not possible. If you’re like me, you don’t intend to retire at 70 or maybe not at all, but it’s nice to know we have the option. Future generations won’t.
I refuse to extrapolate the stories of two families profiled in the linked Washington Post article but will readily admit the author may be on to something. The cartoon was not part of the article but ran in my local newspaper’s Sunday Comics. So I put the two together and the picture is anything but funny.
So what happens when you look at sales figures for RV’s in the US? Yeah…wow.
I guess it’s pretty tough out there for some. The sad thing is it’s going to get a lot tougher.
The Retirement Myth. It’s a new hashtag.
I found some pretty sound advice here. Scroll down to the bottom of the article.
“Debt is not just a credit instrument, it is an instrument of political and economic control.”
Every now and then you stumble upon an article that effectively changes your world view.
It’s not just a millennial problem. Student loan debt increased eightfold among Americans aged 60-64 in the last decade. Is anyone paying attention?
Welcome to peak insanity.
You might ask what does this have to do with underwriting? Great question. Here’s your answer:
Back during the savings and loan crisis in the US (yes, I’m old) I remember seeing lots of lender initiated life insurance applications to cover mortgage debt. The applications were made years after the loans were on the books. One app sticks in my mind. Like any good underwriter I asked for and received a financial statement. The valuation of the real estate seemed high to me. I told the underwriter to decline the case based on inadequate finances. I was questioned on my decision.
One of the properties (there were multiple properties listed on the balance sheet) was in the same city the underwriter lived in. I said go drive by the house and you tell me if you think it’s worth $800,000 based upon appearance and location. The next day he walked into my office.
“It’s an empty lot.”
Hey, at least there are buildings on this $7.2 million property in Vancouver!
This is for all you life insurance executives out there considering accepting Bitcoin in exchange for premiums.