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Where I Stand: Covid-19 business update for Plumas County and beyond

By Ken Donnell

Businessman, Greenville

As we look toward the future economic impacts of Covid-19 in Plumas County, northern California, and the USA as a whole, the situation can be surmised in a single word — chaos.

Chaotic times make it difficult to create accurate projections for businesses, and this severely impedes most businesses operations. Chaos forces businesses to adopt highly conservative positions, with lots of “Plan B’s and plan C’s” in order to survive a variety of possible economic scenarios. Chaos also impedes the entrepreneurship needed to recover from the terrible economics impacts we are beginning to feel from Covid-19. And chaos breeds fear in the minds of consumers so that they hold back on spending, which further spirals the economy downward. Plus, much of the industrialized world, where the pandemic is under much better control, may ban travel to and from the USA, further isolating USA businesses from world markets.

Multiple USA health experts, from government, the private sector, and academia, are warning this pandemic is on a trajectory to soon “spin out of control.” While most of the world has chosen to deal with Covid-19 in a well-coordinated national effort of contain and control, Americans have chosen, or been forced to choose, a piecemeal approach where the only long term strategy appears to be achieving “herd immunity.” However, some academic studies are warning that immunity after infection with Covid-19 may be only a few months before possible re-infection. There are so many unknown factors involved it is difficult to speak with precise language. However, if a goal of achieving herd immunity is the road we are most likely to travel, then there is a strong historical model with the Spanish Flu of 1918-20 which we can employ to create some scenarios regarding the future course of the Covid-19 pandemic, and its effect on the USA, California, and Plumas county.

In 1918, the USA population was less than a third of the present day, but the Spanish Flu killed a staggering 650,000 Americans in 2-1/2 years( equivalent to 1.5 million deaths today). The Spanish flu came in four separate waves of infections. The first wave of the Spanish flu was relatively mild, while the second wave was the most deadly. We are still in the first wave of Covid-19, but the virus has already mutated multiple times, and will likely continue to mutate. Whether future mutations will be more, or less deadly, is impossible to predict. We need to prepare for both possibilities.

Like most pandemics, Covid-19, and its economic impacts will affect different cities and regions of the USA differently, and possibly much differently. Some may experience little disruption, while other cities or states may experience severe impacts and widespread chaos. One of the worst hit nations in the Spanish Flu pandemic was the island of Fiji, where 14 percent of its population is reported to have died in 16 days. Both Fiji and Plumas County are isolated locales, and with such a small population that local matters rarely gain notice from distant decision makers. But, once a pandemic enters such isolated areas, infection and death can be horrific due to relaxed local lifestyles and the shortage of medical resources. While there is hope of a vaccine, the possibility of lowering infections by Americans with strict social distancing and face covering, or achieving herd immunity, there is nothing, at present, to indicate the overall impacts of Covid-19 in the USA will be less than the impacts our nation experienced with the Spanish Flu.

It is inevitable that many businesses and industries in the USA, California, and Plumas County will be severely impacted by Covid-19. The Federal Stimulus program was a great first step towards supporting the national economy. A second round of federal stimulus would be a further help, and perhaps even a third round of federal stimulus spending will help to avoid a deep and serious depression. One heartening fact to recall is that the Spanish flu of 1918-20 was followed by the roaring 20’s. America still has incredible human and natural resources waiting to be unleashed against the pandemic and resulting economic depression, provided we have the leadership to unite us. But this opinion drifts towards politics, and I want to keep my comments focused on specific business impacts to watch out for.

Small brick and mortar retail businesses are likely to close in large numbers, while online and mail order sales will increase. National chains and franchises that survive the pandemic are likely to increase their market share. Most small retailers, especially in rural areas, were barely profitable before the pandemic, and will not survive an economic downturn of two to three years where shopping in person is a health risk. Plus, the average age of such small business owners places them close to retirement, and with no successors prepared to take over these “Mom and Pop shops.” Be prepared for more empty storefronts across both the USA and Plumas County.

Many restaurants and bars are destined to close their doors in the next two to three years. But, given the need to eat, and the passion to drink, new owners are likely to step forward. Service businesses are likely to expand as cash-strapped consumers choose to repair or remodel rather than purchase new.

Inflation will probably be an economic concern in the USA for the next three to five years as the economy recovers and absorbs the enormous new amount of federal debt required to avoid a deep depression. Inflation tends to destabilize economies, but much less than a full blown 1930’s level depression. Let’s cautiously embrace the lesser of these two evils.

The entertainment industry is already experiencing a huge shift away from live performances, large public gatherings, or even visiting a movie theater. Virtual events and other online entertainment options appear to be the way of the future. I hope that our passion for live experiences will someday bring back concerts, festivals, plays, and more, but there is no way to know for certain what the future of live entertainment will be after the pandemic passes.

Agriculture and food distribution are already being disrupted by Covid-19, and the impact may increase in the next two years. Most of the work done to produce and process our food is performed by poorly paid immigrant labor working in crowded conditions where it is difficult to provide social distancing. Fundamentally, there is little difference between most USA meat packing plants and the Wuhan “wet market” where Covid-19 is believed to have first achieved community infection. Both environments are extremely fertile ground for the transmission of respiratory disease. We may soon see packing plants losing employees, fields left unplanted, or crops left to rot for a lack of migrant farm labor. And since ag products are the largest export sector of our economy, a drop in agricultural output, and exports, will ripple all across the USA economy. Look for small food gardens to regain popularity, as during WWII.

Manufacturing is likely to make a small return to the USA as domestic businesses have recognized the problems with outsourcing critical industries and products to foreign manufacturers. This may not result in a huge increase in manufacturing, but any type of economic growth in the next two to three years will be a blessing. Perhaps business people and educators in Plumas County will finally awaken to the potential of manufacturing finished goods using the beautiful wood which comes from our local forests, rather than merely exporting these natural resources as logs or lumber. A reasonably scaled woodworking industry in Plumas County would be a natural, sustainable, and cost effective expansion of the local economy.

To conclude, the near term effects on the overall USA economy are likely to be severe and chaotic as the shape and nature of American business changes significantly in the next two to three years. But In the long term (three to 10 years), the USA, California, and local economies will likely be just fine. The economic impacts of Covid-19 may hurt our pocketbooks, and the political impacts may temporarily weaken our morale, but these are not enough to break our spirit. I believe in America, and the incredible strength of individual American citizens. New and younger leadership will somehow emerge from this chaos, and chart a more positive future for our children, and grandchildren. Hope remains alive, even as we face these darkest of moments.

 

 

 

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