Why Things Won’t Go Back to Normal
States are sheltering in place, with dutiful citizens being told to anticipate life returning to normal in one or two months. One problem — that’s logistically impossible.
If you’re among the many shoppers whose recent trips to the grocery store have involved blank stares at empty shelves, then you understand that’s something’s broken. It’s called the supply chain. The supply chain is a series of connections between suppliers, manufacturers, and distributors that make sure products get delivered.
Supply Chains
Supply chains are very susceptible to breaks, and companies know this. Companies plan for breeches in the supply chain due to natural disasters by having more than one distributor of say, a part it needs, or more than one company of fleet trucks to deliver its goods.
The problem is that the breaks in the chain are too many to have anticipated. Globally, governments have asked their citizens to stop going to work and stay home.
Shock to the System
Here in the United States, only necessary workers such as those who maintain the food supply, cleaning services, and health industry are going to work. That leaves a whole wealth of goods that aren’t being produced as usual, and supply chain shocks take recovery time.
The time it takes a manufacturer to recover from shock to the supply chain is very dependent on the company’s ability to replace the missing link. Still, as I’ve mentioned, the problem is global. We have never seen an issue of this scale in our entire economic history.
History Lesson
The closest we’ve come to witnessing a break in the supply chain of this scale was Japan’s 9.0 Earthquake and accompanying Tsunami, and all of the supply chain fallout that went with it. It took many companies months to recover from the supply chain shock of the event.
If a portion of the globe does manage to recover, one can’t help but wonder, how relevant will the U.S. be as a contributor after the smoke clears?
Assuming that the supply chain recovers globally, and that’s a HUGE assumption that one cannot safely make, for a supply chain to work, there has to be a demand, i.e., consumers. We need jobs if we’re going to have the money to buy anything.
Unemployed
Last week 6.6 million Americans filed for unemployment. Many of the companies they work for won’t stand up to the kind of fiscal pressure produced by “just a month or two” of zero sales because they were deemed a non-essential business. Businesses will be closing at record rates in the coming months.
While the government passed a 2 Trillion dollar stimulus package, it seems to have overlooked that the American economy is 20 Trillion dollars per year. That stimulus package averages out to roughly a week’s pay for most Americans, a month’s at most for the poorest in our nation.
When Franklin D. Roosevelt tried to rescue the nation from The Great Depression he created The New Deal, an entire package of bills and programs that still affects the way America does business. However, the economy still did not recover. Roosevelt learned that Americans had to go back to work for the economy to recover.
A second New Deal was created, creating jobs for Americans through programs that built the libraries, bridges, and post offices we know and love today.
What’s Trump’s deal?
Trump wants workers to get back to work as soon as possible. He knows being out of work is economic suicide. He hasn’t said how he plans to make it happen.
Unfortunately, you can’t wish Covid-19 away. It’s a virus that has to be starved of hosts to die. The American public can’t go back to work before it’s done its part to flatten the curve, and the latest data suggest we’ll be looking at sheltering in place until August at the very least.
Brace Yourselves
Four months can wreck an economy. It can break so many links in the supply chain that it will not recover for decades. If the rest of the world recovers just fine without America, America will be left fighting for relevancy.
I’m not asking anyone to panic. No one has ever been helped by panic. I am saying, brace yourselves. The shelves could be empty for a lot longer than you think. Now is a good time to brush up on your DIY skills, to not waste, to share, and be kind to your neighbors. There’s a new economy on the rise.
