> the underlying business didn't suddenly become nonviable
They may have. We don't know when or if things will go back to the way they were before March 2020 and how consumer and employer behavior will change.
For example, maybe movie theaters are completely screwed. Except as a novelty, the big business chains may not survive. Universal Studios is already pushing back on theater release windows and no live-action movies are being filmed right now, and who knows for how long that lasts. Will the public feel safe enough to go back into theaters all at once before theaters run out of money as if nothing happened? I imagine some of those jobs at least are permanently gone.
Employers will probably maintain work from home and cut back on office space. All those jobs that support maintaining offices may not come back either.
I don't think the restaurant business will jump back either, people can't just restart their failed restaurant as if they didn't lose all that money they needed to keep their already slim margin business open before the pandemic.
Things are going back to how things were in March 2020 very quickly [1] [2]
As an aside, I’ve stopped being surprised with how out of touch and in a bubble HN posts are. There’s so much understanding of human nature out there that is missing here.
> I’ve stopped being surprised with how out of touch and in a bubble HN posts are.
I step away from the site every few days to help stay centered.
I hope things return to normal as quickly as possible, our economy depends on it. Very few people can afford to weather this without a strong economy.
In the US when you lose your job you lose your healthcare too. Healthcare can’t be fixed in a hurry but we can all agree to be reasonable and keep as many people working as we can.
These types of people predict the worst so that they are never wrong on the downside. That’s why the initial death projection was 2m people. Imagine if they instead predicted 1000 deaths.
Same stuff happens with global warming preds. You’re getting the worst case, x100, every time.
Right - we saw a lot of businesses lose 80+% of their customers before any shelter in place orders were mandated. In low margin places like bars and restaurants, it's highly unlikely many can survive with even 75% of their normal level of business.
That just means prices will go up. Nothing is certain, of course, but those prices are low mostly because of high competition, not because people are unable to pay.
There will certainly be a bit of both, but it's not like you won't be able to find a restaurant after the pandemic.
> Employers will probably maintain work from home and cut back on office space. All those jobs that support maintaining offices may not come back either.
I think there will be a greater demand for office real estate because suddenly everyone needs double the space and (spacious) cubicles or standalone offices will make a comeback.
> Will the public feel safe enough to go back into theaters all at once before theaters run out of money as if nothing happened?
the need for theatres and cinemas have not disappeared. They will come back once the virus situation is under control (in say 2-4 yrs time, when vaccine is available). Therefore, the jobs will come back in 2-4 yrs time.
The companies will have been different - the old incumbents will have bankrupted by then. But that doesn't matter - as long as there is new investment, new companies will spring up to soak up the demand.
Same with office spaces. It's not like the need for office space will disappear indefinitely.
>Same with office spaces. It's not like the need for office space will disappear indefinitely.
There is an arguable difference here, a lot of people were willing to WFH before the crisis, but most businesses didn't allow it. A crisis like this, forcing businesses to accept WFH, has the side benefit of doing a large experiment where business owners see whether WFH works for them, maybe even has good sides to it, but also what's negative about it.
Before, many employers were just apprehensive and would only think about this in theory. Many now see in practice what they were afraid about, and maybe they're not as afraid anymore.
So maybe office space will rebound, but maybe not. I'm quite sure in my city most office jobs are doable from home, however for meetings we might get back to some balanced level of WFH + office work. But it may never rebound to pre-crisis levels.
The demand is there, say for food, but the capital has evaporated and the restaurant no longer exists. To start a new one you would need investors to pay for up front costs, labor, food, and commercial rent, and who is feeling bullish enough to start a business notorious for it's razor thin margins at the start of a recession?
This kind of thing is why it's so confusing to me that more commercial landlords haven't been willing to play ball with their tenants on rent breaks through this crisis. Like, what do you have to gain by throwing out a restaurant or other business that is ready to start right back up the moment the lockdown lifts, vs sitting on an empty unit for months and months while the economy remains in turmoil, getting nothing from it. I guess it's maybe a play for some deep-pocketed franchise operator to grab it on spec? Seems risky.
I read somewhere on HN that commercial real estate is financed differently from residential real estate, and in particular, financing costs are related to what a building could earn rather than what a building does earn. If you keep rents the same but have vacancies, your funders apparently don't count that against you, while if reduce rents, suddenly the earning potential of your building has dropped and it will cost you, even if the building is actually earning more in cash flow than if it were vacant.
Seems like a bit of a misincentive here, and a recipe for lenders to go bust too. Then again, it seems like commercial real estate has periodic financial crises, so this seems to reflect reality. Get ready for the next one.
This is 100% true and this actually does affect residential as well. Many real estate investors make more money from the appreciation of the asset as opposed to current rents. Reducing rent reduces the value of the property on paper because the projected earnings over time decrease.
Vancouver's been doing a 5x property tax for vacant units for the past few years, and it does seem to be putting some pressure on owners to get them occupied:
Jobs may come slowly back, but fraction of people and families will be permanently damaged in the process. People are not like rubber bands that return to where they were.
The effects can be generational when families have children.
I get that and am personally for way more support than the paltry 1200 ea that has been sent out so far. I'm just saying the loss of jobs here was artificial where every other depress/recession it's come out of systemic reactions and problems. As this goes on longer it starts to act more like a normal one though I'll admit since businesses start to fold and go under based on their fixed costs meaning the jobs are actually lost.
Looking at past economic studies, there is a long run hysteresis effect after depressions and while the jobs should come back it may be on a time frame of a decade or longer.
My grandparents spending habits were permanently affected by growing up during the great depression. They talked about their frugality in the context of the depression often. It anchored their entire concept of money. My parents were deeply affected too and often talked about their own childhood and how they were taught to handle money. I feel like I was brought up with a vestige of that great depression mentality and often actively challenge myself to be less frugal. That's 90 years of long run hysteresis right there.
And some people will cook more. For example, we have a lovely little neopolitan pizza joint a block away, but two days ago I received an Ooni Koda 16 and have discovered how easy it is to make my own neopolitan pizzas. That's basically a permanent reduction in my spending on pizza if/when it does reopen.
My guess is when you're tired and just want dinner now-ish, you'll learn to value that nearby restaurant. It's not like restaurants are only viable because people don't know how to cook themselves.
You can quibble about a specific food, but I think the general point stands. Habits are powerful and they can change. Every adult in the country (world?) is now forcibly learning how to cook or practicing a few new recipes. It turns out that some of those recipes are delicious, dead simple and once you know how to do it, having someone else do it for you looses it's convenience factor.
For myself:
I love cappuccino and bought several per week from cafes near me. I was missing them, so did a bit of research into home espresso and bought a nespresso and semi-automatic milk frother. My homemade cappuccino is excellent. It takes 2 minutes to make with just about zero cleanup. I have had better cappuccino, but seriously the extra time, money and hassle are no longer worth it for me. I will make it at home. It's also 6x cheaper.
I like to treat myself to steak every now and then, but only ever at a restaurant. I recently bought a package of strip steaks and did some trial and error on a George Foreman grill I found in the back of the cupboard I hadn't used in years. I figured out a process that works with that piece of equipment, and now I can knock out an amazing steak in exactly 4 minutes. It's cooked exactly how I like it. Why bother with the hassle and expense of going out for one? Plus it's 4x cheaper.
I doubt I'll completely stop going out or getting delivery, but if I reduce by 10% and everybody else does too, we're talking a lot of businesses that will close.
I'll do you one better on the steaks. Buy a Beville Joule and a vacuum sealer. Season the steaks with salt and pepper and vacuum seal it. Heat with the sous vide to 110F for a 1" thick ribeye. 120F for a 1.5" cut. Preheat grill to 500-600F. Remove steak from water and bag, pat dry and re-season (most of the original season was absorbed into the steak). Then toss on the grill for 1-2 minutes each side depending if you like it done rarer or better cooked.
Adjust accordingly to your liking, but in general, you can easily achieve premium steakhouse quality with this approach with 30 min to 1 hour, start to finish. Mostly the sous vide as used here is about bringing the internal temperature up so that the steak cooks quickly and more evenly than a steak pulled right out of the fridge. This is even less cleanup than a foreman since the only thing getting dirty is the surface you season on (usually the paper the steak is wrapped in) and the grill you just need to brush with a wire scraper.
I recommend a VacMaster VP215, but I understand if that's way outside your budget. I personally use mine daily for lots of things besides sous vide like storing food, saving sauces
Supporting example: WE are making bubble teas with boba at home, takes about 10 mins and they are amazing and much cheaper and convenient than $5-6 that bubble tea places here charge.
Counter example: We basically rarely ordered delivery and preferred take-outs. However, due to the increased delivery usage recently we figured that since delivery costs are similar for a restaurant 5 miles or 15 miles out, we are getting food from restaurants further out than we would normally not go to as they were too much of a drive.
Tech sector had it easy because it is still early and exec suite is desperately clinging to a belief this will be a V recovery rather than a slow and painful crawl down followed by the same kind of slow and painful crawl up.
