But as lockdowns have been lifted in most of the country and businesses have been able to reopen, that supply shock has waned, only for a new problem to emerge: weak demand. In other words, a supply shock has been replaced by a shock to demand.
Some of the weakness in demand is because we’re on the verge of a classic recessionary cycle: Since the stimulus payments to unemployed workers ended in July, people either have less money to spend or are worried about spending it, which means businesses have less revenue, which makes them cut back on hiring and investment, which means less spending.
But what makes this demand shock exceptional is that the U.S. still has 40,000 to 50,000 new Covid-19 cases and 600 to 700 deaths every day, and as a result lots of Americans are still leery of doing normal, not particularly indulgent things like eating out, going to the gym, or going to the movies. A recent survey by research firm Datassentials, for instance, found that 58% of those surveyed described themselves as “uncomfortable” with dining indoors, and 36% described themselves as “very uncomfortable.” Not surprisingly, then, no matter how creative restaurants get, traffic is still down sharply in most places, and 2.5 million restaurant workers who lost their jobs in April remain unemployed. Similarly, gyms have been open in most states for months now. But a recent survey of 5,000 gym-goers by RunRepeat found that 70% haven’t returned and 43% said they had no plans to go back. Half a dozen gym chains have filed for bankruptcy in recent months, including 24 Hour Fitness, the owner of New York Sports Club, and Gold’s Gym, with many of them permanently shuttering a majority of their locations.
Or take movie theaters. By September, theaters were open in 44 of 50 states, and Warner Bros. decided to go ahead with plans to release Christopher Nolan’s Tenet, which had been one of the most highly-anticipated films of the year even before the pandemic hit. Even though theaters in New York City and Los Angeles remained closed, Tenet opened on almost 3,000 screens across the country. But even as Tenet did big box-office numbers overseas in countries where the virus has been contained, it made just $9.4 million on its opening weekend, despite facing essentially no competition. The hope had been that Tenet would prove people were ready to go back to the movies. Instead, it proved most weren’t. Hollywood studios concluded there was no point in trying to release big films for the rest of the year, and pulled their tentpole films from the fall schedule. And thanks to the combination of consumer anxiety and the lack of new content, Cineworld, owners of Regal Cinemas, shut down all 536 of its theaters in the U.S., while AMC, the largest U.S. theater chain, says it could run out of cash by the end of the year.
This shouldn’t be a revelation. In fact, myriad studies have now shown that in the early days of the pandemic, people began voluntarily socially distancing and avoiding places they perceived as risky even before lockdowns were put in place. And if you go further back in history, during the 1918 Spanish flu pandemic, businesses stayed open in most cities, yet economic activity still fell sharply, and contemporary accounts suggest that the economy only started to rebound when people became less afraid of catching the flu. The point is that lifting stay-at-home orders and opening restaurants isn’t enough: Until consumers feel safe, they’re going to stay away.
- Dotnonymous - Tuesday, Oct 20, 20 @ 11:31 am:
You can’t fool all the people…but you can fool enough of them to make everyone sick?
- Grandson of Man - Tuesday, Oct 20, 20 @ 11:35 am:
“as a result lots of Americans are still leery of doing normal, not particularly indulgent things like eating out, going to the gym, or going to the movies”
Um, hello? That’s what’s helping cause “shutdowns,” consumers who don’t want to risk harming themselves and others. As has been said so many times, get control of the virus and the economy will follow. People need to mask up, social distance and wash hands, etc.
- @misterjayem - Tuesday, Oct 20, 20 @ 11:42 am:
“lots of Americans are still leery of doing normal, not particularly indulgent things like eating out, going to the gym, or going to the movies”
That’s because I know that the first people to return to restaurants, bars, the gym and movies will be — by definition — the people least concerned with the threat of Covid-19.
I have no interest in surrounding myself with such people.
– MrJM
- Thomas Paine - Tuesday, Oct 20, 20 @ 11:42 am:
Corollary: we have reopened indoor restaurant service to make 6 percent of the people happy.
Two more large school districts have announced they are going full remote due to rising cases.
- Flying Elvis'-Utah Chapter - Tuesday, Oct 20, 20 @ 11:44 am:
So, the “silent majority” are speaking with their pocketbooks.
Not what some politicians are accusing other pols of.
- hisgirlfriday - Tuesday, Oct 20, 20 @ 11:46 am:
I hope movie theaters can stay alive long enough until I feel comfortable in them again. Maybe someone should start building new drive-ins?
- Powdered Whig - Tuesday, Oct 20, 20 @ 12:11 pm:
One of the most interesting things to me has been that I do not miss many if these things that are referred to in the article.
Last winter, we were able to convert a part of our basement to function as a home gym - no need to go to any gym ever again.
Also, I do not miss going to eat out at restaurants or going to the movies at all. I am fine with not doing those things again for a long time, if at all.
- tea_and_honey - Tuesday, Oct 20, 20 @ 12:11 pm:
I wonder how many consumer’s habits have been permanently changed by the pandemic.
Using myself as an example, in the “before times” I had a 2-3 times a week Starbucks habit, met friends out for dinner once a week, and went to a movie/concert/play etc. a few times a month.
Eight months in to not doing any of those things I’ve completely broken the mindless habit of just doing those things because “it’s what I do.” My wallet is a lot happier and honestly after the first few weeks I didn’t miss them.
It remains to be seen what will happen if/when I finally feel comfortable going out in public again but I have a pretty good feeling my consumer spending won’t just pop back to pre-pandemic levels.
- Dotnonymous - Tuesday, Oct 20, 20 @ 12:21 pm:
I would pay double for the Drive-In Movie experience of my youth…or triple.
- ArchPundit - Tuesday, Oct 20, 20 @ 12:34 pm:
Drive ins are great, but during the summer they cannot start until later which is an issue if you don’t want to be out until 11:30-midnight.
As MrJM says, the additional problem with going out isn’t just the virus, but the number of people going out who are likely the least careful. I don’t want to hang out with Darrin Bailey when there isn’t a pandemic.
- Chatham Resident - Tuesday, Oct 20, 20 @ 12:40 pm:
==I would pay double for the Drive-In Movie experience of my youth…or triple.==
It’s closed for the season now, but in Springfield you can still get the old-time drive-in experience. The Route 66 drive-in along I-72 between the Route 4/Chatham/Veterans exit (Exit 93) and MacArthur Blvd (Exit 96). Next to Knight’s Action Park.
- Chatham Resident - Tuesday, Oct 20, 20 @ 12:41 pm:
==Drive ins are great, but during the summer they cannot start until later which is an issue if you don’t want to be out until 11:30-midnight.==
Hence why most of the remaining drive-ins (Knights included) are only open on weekends during the summer (Friday/Saturday/Sunday).
- walker - Tuesday, Oct 20, 20 @ 1:14 pm:
Local school districts, who have opted for various hybrid schedules, report that on days when large numbers of students are welcome to attend in person, significantly fewer are showing up.
It’s not the Governor who is driving most of the “shutdown,” it’s responsible adults.
- Home and Happy - Tuesday, Oct 20, 20 @ 1:15 pm:
I agree with tea and honey. I used to eat out all the time because I was “too busy”. I used to go to the movies because that was what I could do as a very overweight individual. Joined a gym to loose weight but gained even more because I was being “healthy”. Since COVID, I’ve quit going out to eat and even stopped take out. Somehow I found the time. I used my gym membership to set up one at home with minimal equipment and actually use this one. So far this year I’ve lost 80 pounds and intend to keep it off. I rediscovered outdoor activities I abandoned decades ago and feel much better physically and mentally. Both my wallet and I are much healthier now and getting better every day.
I’m in a high risk category so much of this is a result of my respect for the virus. I have not felt safe since February. I probably won’t ever spend the way I was prior to the pandemic but I would still like to feel safe and appreciated by our society again someday.
- Finally Out - Tuesday, Oct 20, 20 @ 1:20 pm:
Correction to Chatham Resident.
Route 66 drive in is not closed for the season yet. They are still open Friday/Saturday nights.
- Rich Miller - Tuesday, Oct 20, 20 @ 1:27 pm:
===Route 66 drive in is not closed for the season yet===
That is true. Going to Rocky Horror on Saturday night, in fact.
- Cheryl44 - Tuesday, Oct 20, 20 @ 1:39 pm:
I’ve been to the movies twice during the End Times. I saw the Ianucci David Copperfield with about 5 other people in the theatre and the Triet Sybil (no, not that one, this one’s French) with 2 other people in the theatre. Wanna see a movie? Go to an early show and skip the blockbusters.
- Chatham Resident - Tuesday, Oct 20, 20 @ 1:46 pm:
===Route 66 drive in is not closed for the season yet===
Sorry about that, didn’t realize that. I should know better, I drive past Knights and the drive in on my way to work. (Although many days, this morning included, I’m more focused on the road and traffic than the what’s playing sign at the drive in).
- 1st Ward - Tuesday, Oct 20, 20 @ 1:49 pm:
Block Club reported that various restaurants are voluntarily shutting down until March/April as they cannot maintain profitability as the season changes with no outside dining. I would imagine demand plays a factor as well. Patios were packed over the summer but few were interested in sitting inside.
AMC is so desperate for cash that you can rent out a whole movie theater for $99. Most movie chains will file by YE or the beginning of next year.
- cermak_rd - Tuesday, Oct 20, 20 @ 1:50 pm:
I agree with so many others on here. I am saving a lot of money by not going out (I’m already at home, why not cook a healthier, better meal than I can get out?), by not mindlessly buying stuff, by not driving all the time etc.
Post pandemic when I have a vaccine and +70% of the population has been vaccinated will my expenditures just bounce back? I doubt it.
- RNUG - Tuesday, Oct 20, 20 @ 3:26 pm:
== Two more large school districts have announced they are going full remote due to rising cases. ==
Didn’t the State just mandate schools had to be mostly in person by November 1?
- Rich Miller - Tuesday, Oct 20, 20 @ 3:27 pm:
===Didn’t the State just mandate===
Nope.
- RNUG - Tuesday, Oct 20, 20 @ 3:30 pm:
{= It’s closed for the season now, but in Springfield you can still get the old-time drive-in experience. ==
Actually, Knight’s RT-6- is still open weekends. They are pushing the season. Rocky Horror Picture Show is scheduled. Only hassle is the need to pre-purchase tickets online.
There are several more drive-in theaters in Illinois: Gibson City, Litchfield, and Belleville come to mind off the top of my head. And one is suburban west of Chicago.
- OneMan - Tuesday, Oct 20, 20 @ 4:03 pm:
I wonder what the economic ’surge’ if any is going to be once things get back to ‘normal’. Besides general stuff that has been delayed, how many people are going to just do stuff they have been putting off.
For example there is week long thing in Spain I have wanted to do and have thought about doing, that when it returns I am going to do the first summer I can.
- Pundent - Tuesday, Oct 20, 20 @ 4:12 pm:
Remote learning is being strongly encouraged at the county level, but it’s still up to the individual districts.
- Dotnonymous - Tuesday, Oct 20, 20 @ 4:25 pm:
The drive-in…what Paul Simon said about sweet imagination…yeah…what a rush of memories.
A misspent youth seems less misspent in retrospect…sweetly.
- Proud Sucker - Tuesday, Oct 20, 20 @ 4:39 pm:
===Going to Rocky Horror on Saturday night, in fact.===
That seem very on-brand for you. Have a great time. Enjoy the meatloaf.
- ArchPundit - Tuesday, Oct 20, 20 @ 11:20 pm:
==Hence why most of the remaining drive-ins (Knights included) are only open on weekends during the summer (Friday/Saturday/Sunday).
And it’s a blast-the last town we lived in had one with a double feature of The Force Awakening, Captain America Civil War and it was fun, but I was dead by the end.