Five Surprises from Coronavirus

Prior to peddling labels, I spent time in the investment banking and investment management worlds.  Byron Wien became a famous Wall Street strategist by issuing a list of “surprises” every year.  These predictions often went against consensus thinking and were meant to challenge the assumptions behind your investment decisions.  You can read his 2020 list here:

Without further ado, here are my five surprises that emerge from this global pandemic.

  1. The “farm to table” concept spreads to other goods.  Local restaurants often name the farm your food comes from along with the distance the food traveled to get to the table.  High end retailers will start to do the same for clothing. 
  2. I’ve written before about having a milkman when I was a kid.  Delivery routes will return.  It costs money to deliver items.  You will put stuff on your list and it will be delivered on a specific day each week.  Someone smarter than I will figure out how to consolidate purchases from several places and deliver them together.  (Hello, my packaging distributor clients!)  You’ll pay a premium for one time deliveries. 
  3. Supply chain logistics becomes the most popular major in college.  These skills are in high demand across companies big and small.  “Just in time” becomes a curse word, replaced by “safety stock.”  Power in big companies goes from the corporate finance department to the supply chain department.
  4. Trends towards urbanization decline.  As we are starting to see, some cities and states will fare better than others.  If you are a parent of a young person, do you want him or her chasing a dream in New York City or San Francisco?  Hello, flyover country!
  5. Prime packaging loses ground to functional packaging.  Do you need a fancy label or a fancy package if a product is never going on a store shelf?  Companies will rethink branding. 

I’m a broken clock that will be right every few years:  all of this (and monetary looseness) points to higher inflation.  Some of the inflation will be offset by reduced demand that will become permanent or semi-permanent.  Office space will be reduced.  Corporate travel will be reduced.  Other changes will reduce aggregate demand.  It will be interesting to see how the demand picture shakes out and its implications on inflation and/or deflation.  As always, it will be complicated.  Some items will rise in price; others will plummet. 

Shocks change the world in ways we cannot imagine.  Take some time to use your imagination and think about the future.  Let me know what you think might happen.

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