Thread by @jcawley01

@PaulGambles2 @MartinSoong @cnbcSri 1/ I agree with the points in your thread and share the expressed intuitions. In this reply I want to set aside the fed/asset questions and just focus on the real economy.

Events like this tend to accelerate trends that already existed, so let’s highlight 3 of those:

@PaulGambles2 @MartinSoong @cnbcSri 2/ a) Manufacturing employment both in absolute # as well as % of total workforce have been declining for decades. This trend may bounce a bit, but will accelerate. Even when sector output eventually goes up, jobs will decline.

@PaulGambles2 @MartinSoong @cnbcSri 3/ a) cont. Any reshoring that may happen won’t be big enough to change that. In fact, we should expect manufacturers to use the free capital available to invest in further automation to eliminate jobs made unreliable by virus “flare-ups” effecting employees.

@PaulGambles2 @MartinSoong @cnbcSri 4/ Healthcare was already an economic cancer costing 2x what it should and draining resources from the rest of the economy. Unfortunately, that trend will also accelerate making a bad situation even worse. It will create job growth, many with decent pay, but its a huge drain.

@PaulGambles2 @MartinSoong @cnbcSri 5/ c) In my book “The #FifthParadigm” i define a sector I call “Leisure Services” which includes bars, restaurants, retail, etc. Basically, all the services businesses aimed at what we do in our leisure time.

@PaulGambles2 @MartinSoong @cnbcSri 6/ c) cont. Pre-COVID that sector was roughly 1/3 of all existing jobs and 2/3 of all new jobs forecast for the next 5 yrs. The sector was central to the overall direction our economy was moving.

It’s obviously ground zero for COVID.

@PaulGambles2 @MartinSoong @cnbcSri 7/ c) cont. I do expect long term recovery, but labor costs in the sector will go up, necessitating increased capex to automate major activities. Long term - that could be healthy. But margins will get worse and a lot wont make it.

It will be central to any eventual recovery.