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It's not that common shocks to an economy to have a permanent effect. Businesses and investors understand that the event will be temporary, some businesses may

It's not that common shocks to an economy to have a permanent effect. Businesses and investors understand that the event will be temporary, some businesses may shut down during the event but once the event ends, the pent-up demand it generates and allow spending on recovery, tends to more than compensate. That said, the economy was an extremely fragile condition before all this began so this might be an exception.

deleted 7y ago
[deleted]
semi-extrinsic 7y ago
For many of the things affected by the coronavirus (events, going to restaurants, going on holiday etc), you basically don't aggregate any pent-up demand. People won't take twice as much holidays next year. It's tricky to argue for the recovery on that.
- kortilla 7y ago
  A great portion of people have very little self control when it comes to spending and will spend the money that would have been on a vacation on something else (weekend travel, a new phone, extra eating out, etc) so the money does indeed usually flow back.
  - tnel77 7y ago
    It’s sad how accurate this statement is.
  - Proziam 7y ago
    "I didn't get to go on vacation so instead I'll..." I've heard variants of this from so many people at this point that I'm convinced the default human behavior is to consume - not to preserve or save.
  - semi-extrinsic 7y ago
    Well, from the perspective of the overall economy over a longer period of time, maybe. But for individual companies, it's a small comfort that their missed income will eventually get spent somewhere else. If companies go out of business now, there is no quick fix to just bring them back later, so the impact to the economy is long lasting in this sense.
kortilla 7y ago
> That said, the economy was an extremely fragile condition before all this began so this might be an exception. It was? This bear case hasn’t had much data supporting it. Can you elaborate what made it “extremely fragile”?

deleted 7y ago

[deleted]

semi-extrinsic 7y ago

For many of the things affected by the coronavirus (events, going to restaurants, going on holiday etc), you basically don't aggregate any pent-up demand. People won't take twice as much holidays next year. It's tricky to argue for the recovery on that.

kortilla 7y ago
A great portion of people have very little self control when it comes to spending and will spend the money that would have been on a vacation on something else (weekend travel, a new phone, extra eating out, etc) so the money does indeed usually flow back.
- tnel77 7y ago
  It’s sad how accurate this statement is.
- Proziam 7y ago
  "I didn't get to go on vacation so instead I'll..." I've heard variants of this from so many people at this point that I'm convinced the default human behavior is to consume - not to preserve or save.
- semi-extrinsic 7y ago
  Well, from the perspective of the overall economy over a longer period of time, maybe. But for individual companies, it's a small comfort that their missed income will eventually get spent somewhere else. If companies go out of business now, there is no quick fix to just bring them back later, so the impact to the economy is long lasting in this sense.

kortilla 7y ago

> That said, the economy was an extremely fragile condition before all this began so this might be an exception. It was? This bear case hasn’t had much data supporting it. Can you elaborate what made it “extremely fragile”?