It’s Not Going Away. And There’s No Going Back

The US and Europe have now seemingly lost control of the virus — again.

Although a vaccine does appear to be just around the corner, it will be months before a shot is widely distributed, according to most expert accounts. Last week, European equities were rattled by a series of new containment protocols, including new restrictions on household “mixing” in London and curfews in some of France’s largest cities, which went into effect over the weekend. Ireland is considering a full lockdown.

In Italy, Giuseppe Conte is poised to ban some sporting events and will reportedly order restaurants and bars to close their doors promptly at 10 PM. The country reported a record 11,705 new cases on Sunday.

Although no one seems particularly keen on taking the political risk associated with instituting the kind of harsh, nationwide lockdowns that plunged the world into a brief depression earlier this year, leaders are essentially encouraging citizens not to be around each other.

“How winter and Christmas work out will be decided in the coming days and weeks through the sum of individual actions,” Angela Merkel told Germans, who should avoid unnecessary trips and parties, according to the chancellor.

“If all of us do without private festivities, large gatherings, and parties, we can slow down the spread and keep open schools, the economy, and large parts of social life,” Austria’s Sebastian Kurz remarked, on social media.

The world is now attempting to come to terms with a reality that most politicians hoped to avoid, even as many health officials and infectious disease experts long ago warned that COVID-19 would likely become endemic.

The bottom line is this: COVID-19 isn’t going away. While it’s conceivable that between multiple vaccines, better therapeutics, and herd immunity, it will eventually cease to be an impediment to everyday life, eradicating it altogether now seems far-fetched. As it turns out, the virologists and epidemiologists were mostly correct. I guess we should have known, right?

In the US, the president’s talking points continue to revolve around the notion that the country is “rounding the turn.” I wouldn’t normally quote Forbes, but this is a case where it seems harmless. “Trump has said the US is ‘rounding the turn’ on the coronavirus 28 of the last 46 days,” one of the publication’s staff writes noted on Friday.

While I suppose one can argue the country has “rounded” various “bends” or “corners” or “turns” depending on what statistics you choose to employ, when it comes to infections, the inconvenient truth is that the US recorded 50,000 or more new cases for five straight days through Saturday.

I bring this all up again over the weekend because… well, because it’s headline news for one thing, but beyond that, I wanted to underscore some of the points made here on Saturday in “The (Corporate) World According To COVID-19.”

While you can plausibly argue that, over time, the world will get better at coping with the virus, the persistence of the malady is disconcerting from an economic perspective. If I were in the C-suite, I would be palpably concerned about the future. Even if large swaths of the public in advanced, developed economies aren’t inclined to change their lifestyles to avoid becoming infected, at least some of the public is. And that means activities like going to the movies, attending indoor sports events, and frequenting retail shops will be avoided going forward, where possible.

There are all manner of caveats, of course. People will probably still attend the Super Bowl if you let them, for example, especially in an open-air stadium. And fans have been more than willing to attend college football where permitted over the past several weeks. And, sure, the likes of Walmart and Target and Home Depot will probably still be able to attract plenty of foot traffic.

But what I wonder about are events like regular season professional basketball games, for example. Or trips to brick and mortar retailers (which were already a dying breed) just to “browse.” Or the kind of spur-of-the-moment decisions to eat out as opposed to cooking at home which make up the vast majority of restaurant traffic.

I doubt if any of that is coming back anytime soon. For restaurants and already beleaguered brick and mortar retailers, that probably means closing forever. As regular readers know, I once frequented bars and eating establishments virtually every, single night (and in some cases, multiple times per day). There was a time when I spent thousands of dollars per week at bars and restaurants. A long time ago, in a galaxy far, far away, I was a bartender. I’ve known countless restaurateurs both small-time and corporate over the decades. They cannot operate in an environment where every decision to eat out entails diners weighing a trade off between the convenience and experiential pleasure of going to a restaurant and their health. It just won’t work. Especially not if patrons and servers and bartenders are all compelled to wear masks in perpetuity.

I continue to worry that the services sector in large, developed economies will never fully recover from 2020. That doesn’t mean it’s all going to fall apart in the space of one quarter. Rather, what it means is that small restaurants and clothiers will close their doors without anyone other than local patrons noticing. Then, gradually, chain restaurants operating in smaller cities will close as corporate management cuts costs and focuses on locations centered around the kinds of teeming second-tier cities where the suburbs are filling up with workers currently fleeing America’s largest urban areas to take advantage of rock-bottom mortgage rates and work-from-home arrangements.

This will be a death knell for many smaller towns and cities where thousands of jobs at places like Applebee’s (just to use a ubiquitous example) will disappear, alongside jobs at theaters and whatever’s left of brick and mortar retail. As those jobs are eliminated, the spending power of those local ecosystems will decline, similar to the dynamics which played out across locales that lost manufacturing jobs to globalization and offshoring in decades past.

With that in mind, I’ll leave you with a particularly poignant passage from last month’s “Redundancies,” which I think will prove prescient over time, especially if there’s another health crisis at any point over the next several decades:

Ironically, just about the only businesses one can imagine escaping this vortex are the smallest of the small – a dive bar in a frontier town in Alaska – a barbershop in some modern day Mayberry – a burger stand in some totally nondescript Midwest township – the diner from Monster’s Ball. In short: businesses with no connection to modernity and no aspirations to serve anyone other than the same two-dozen people (and their descendants) they’ve been serving for decades.

And maybe that’s the ultimate irony – the only way to avoid not mattering is to never have mattered in the first place.