Life is going to change.
How could it not? We have seen health scares over the years, but at a psychologically safe distance far from home. Not this time. The impact is in every household. Our children and our parents. At work. At schools. Where we shop. Where we eat. Where we gather as a community to count our blessings. And yes, we still have many blessings to count.
Our world, the way we perceive it and how we engage with it, is sure to change. That thought is at the front of our mind as yet another jobs report puts the tally of those seeking assistance at 16.8 million people in only three weeks, and counting. As we appear to be at/near the peak healthcare resource needs of this wave, the conversation is under way of when we come out from our shelters and back into the world. The “when” however cannot be considered without the “how.”
It is far from the first time that our country’s future has been shaped by an event of such magnitude that it becomes woven into our cultural fabric. Terrorism is another reality of the world that Americans mostly read about in the newspaper rather than seeing it with our own eyes – until September 11th. The horror of it shocked us out of our complacency. Now we nearly undress at every airport and undergo security screening before entering stadiums where large groups of people gather.
The psychological damage of the Financial Crisis economic shock also left its mark. As flawed as much of the Dodd-Frank legislation is, the pressure for banks to reduce their leverage has reduced the risk of economic contagion from this health shock. The playbook authored by the Federal Reserve to counter-balance the economic decline of the “Great Recession” laid out a plan that the Fed leadership has amplified in the current environment to avoid depression.
So now we will incorporate an increased awareness for health and economic risks stemming from epidemics. Fortunately, there are lessons from which to learn quickly by looking at the experience of others. Analysis by well-known policy adviser Jeffrey Sachs in a recent article showed that Asian countries had a lower number of confirmed COVID-19 cases despite similar levels of testing (stated on a “per million” of population) relative to the developed world in the West. In addition, while the reduction of retail and recreation is significant across Asia at 20-50%, it is less than the experience of Europe and the US (50-90%). The reason is simple if you think about it – they have lived with this risk before. They have “muscle memory” on policy. Their people know what to do and understand how important it is to act quickly. They have built the technology tools to surveil and notify where needed for more targeted action rather than broad community-based efforts.
Of course, the lessons will have been taken in the context of our American identity. Our culture is unique to us. Data privacy is a major concern. We value individualism and freedom. We bridle at government interference and controls. That said, we will find our middle ground. Technology will be part of the solution. It is encouraging to see an article indicating that arch-rivals Apple and Google are joining forces to allow their operating systems to cooperate with applications developed by public health authorities (hopefully taking the best practices of data privacy!). In times of trouble, we set differences aside and come together.
So how will the future look? We have lots of ideas on what will change – how we shop, how we work, where we live, where we travel, how we learn, how we spend time, how we manage our health, how technology facilitates all of this, how our government’s role will change….the list goes on. The only certain answer to the question is “different”, how different will depend on our choices as a society.
We should not be afraid of change. Change is the only constant they say. We have always come out on top. Despite the two prior “world changing” setbacks in just the last twenty years, our economy is bigger and our stock market is higher. We work through them, we adapt, and we move past them.
Life goes on…to bigger and better things.
Will Skeean, CFA
Partner – Investment Management Team Chair