Juggling Dynamite

Half of the independent Canadian restaurants recently surveyed say that they are unlikely to survive the current crisis.  This is bad news for small business owners in the sector, as well as related lenders, employees, landlords, economic growth and tax collection.

A similar trend is evident in the American data and surveys as shown in the chart below courtesy of Yelp.  Forty-one percent of business closures in the household service and retail space since March 1 have been noted as permanent, led by  53% of restaurants.

But there is also a positive side to this story for households.  The explosion in eating out and prepared food consumption over the past 15 years helped to drive a pandemic of debt and food-related illness throughout North America.  This has come at a heavy cost to family health, self-sufficiency, culture and our tax-funded sick care system.  More people preparing their own food at home also means less throwaway packaging and plastic toxins in our environment and bodies.  For more on this see:  We are all plastic people now, in ways we can’t see – and can no longer ignore.

Recent consumer surveys show that overall Canadians are feeling less stressed about their finances now than at the start of the year.  As consumer solvency trustee Scott Terrio explains in the segment below, this is because they are spending less on child care, commuting and eating away from home, but also because they are receiving emergency government subsidies and many debt payments are in deferral.  The latter two factors have bought a temporary lull before the default storm that’s building  The behavioural change toward spending less and saving more, meanwhile, is likely here to stay.  This shift was long overdue and much needed.  It is also a negative for economies like Canada and America that are today 60 to 70% reliant on consumer spending.

Scott Terrio, manager of consumer insolvency at Hoyes, Michalos & Associates joins BNN Bloomberg to discuss the MNP Consumer Debt index which highlights the importance of the Canadian government programs for the financially vulnerable and highly indebted. Here is a direct video link.

Classic: recurrence waves and spreading frustration with leaders as no quick fix is found.

Global coronavirus cases are now above 14 million, with deaths over 600,000. Infections are also rising in the state of Victoria in Australia with masks now mandatory starting this week in Melbourne. People are now facing steep fines if they are caught without a mask on in public. Infections continue to rise in the U.S. with record numbers also being recorded in Hong Kong and in Tokyo. Bloomberg’s Yvonne Man reports on “Bloomberg Daybreak: Asia.”  Here is a direct video link.

Having recently read several books on the history of pandemics, I am reminded that their recurrence and human behaviour have been consistent throughout the millennium.  And it is typical for incumbent politicians and policymakers to downplay spread risks in an effort to maintain power, consumer spending and the economy.

In the end, though, measures needed to end a pandemic are the same today as they have been for centuries:  social distancing, masks and hand washing.  Avoiding crowded spaces, and especially where enclosed, is a major element of the social distancing (six feet minimum spacing) needed.

In Japan and other parts of highly populated Asia, these imperatives have long been understood.  How many of us have seen travellers wearing masks in airports over the years and wondered why?  Now we know.  The public service announcement on the left from Japan’s prime minister’s office explains the “Three Cs” of spread and how risks are highest where they overlap.

Unfortunately, for all hoping that things can get back to normal soon, a couple of places where the C’s overlap most are schools and group care centers since it’s very difficult to maintain the constant six feet of spacing needed between children.

A recent UK study looked at nine interventions to reduce the spread of COVID-19 in 41 countries between January and April 2020 and found eight of them were effective but closing schools reduced the R the most (an average of 50%).  Other lesser but still effective efforts included: closing non-essential businesses (34%); closing high-risk businesses (26%); limiting gatherings to 10 people or less (28%); and issuing stay-at-home orders (14%).

The “surprisingly large role for schools” the study found may partly explain why the UK did not order a full return to office work this week and why schools and group care centers are unlikely to remain open as usual in many areas.  When they do reopen, community spread typically accelerates and the need for lockdown returns.

While the COVID-19 rate of spread has fallen in Canada in recent weeks it is still accelerating around the world, and no one is out of danger.

Half of the last big respiratory outbreaks have come with significant subsequent waves after a summer trough.  As soon as the bad weather comes and more people start staying indoors again, a resurgence of COVID-19 along with other flu should be expected (descendant strains of the 1918 influenza still circulate today–it has weakened, but no vaccine has stopped it).

Business, income and social disruptions will cause hardship, but not embracing the “Three C’s” will make the battle longer and casualties worse.