Foretaste of the Lockdown-Driven Collapse in the Services & Retail Sectors: Holy Moly, What a Catastrophic Mess

Services account for 70% of the US economy. Here’s what’s happening to services and retail in economic powerhouse Texas.

By Wolf Richter for WOLF STREET:

The Texas Service Sector Outlook Survey, released by the Dallas Fed on March 31, is one of the first indicators as to what services more broadly – they account for about 70% of the US economy – will look like under lockdown. The data also includes the retail sector that’s an even bigger mess.

This is based on surveys of executives of 248 companies in the Texas service sector and of 56 companies in the retail sector. The companies are unnamed. The data was collected from March 17 through 25. It was on March 19 that Texas Governor Greg Abbott issued a comparatively mild lockdown order. A few days later, major cities and counties issued tighter “stay at home” orders. All this happened within the survey collection period. Some of the announcements might have come too late to be fully reflected in the survey data. Nevertheless, the results were stunningly ugly.

The Texas Service Sector Outlook Survey’s General Business Conditions Index, which reflects service sector executives’ perceptions of broader business conditions, collapsed by over 85 points to an epic all-time low of -78.8:

In the comments, which spanned the spectrum, one executive from the hospitality industry had this to say: “Seems pretty obvious, but due to COVID-19, our business has effectively shut down. Meetings are canceled through May, and many are trying to cancel as far out as January 2021. There is no individual transient travel occurring currently, and we have no idea how long that will continue. We have furloughed almost 90 percent of our staff.”

The revenue index of the Texas Service Sector Outlook Survey collapsed from +14.0 in February to -67.0 in March, an all-time low. Note what now looks like a relatively small dip during Financial Crisis 1:

Employment contracted sharply and hours were reduced for those still employed. The employment index plunged from +6.1 to -23.8, also the lowest level on record:

And retailers got whacked. The Retail Sales Index of the Texas Retail Outlook Survey collapsed from the already beaten-down level of -2.5 in February to an epic all-time low of -82.6 in March:

In terms of retail executives’ perception of broader business conditions, the general business activity index collapsed from the beaten down level of -5.0 to a historic low of -84.2:

Comments from retail executives were somber. From an executive of a clothing and accessories retailer: “The majority of our stores have been forced to close due to the coronavirus.”

From a nonstore retailer: “Most of our business has gone to zero except for essential locations such as hospitals, military bases and prisons. As a vending company, we know we are ‘less essential’ to these businesses, so we anticipate our business could go to zero due to the current COVID-19 situation. We are contemplating at this moment sending most employees home while our owners determine whether they can afford to pay reduced salaries and cover benefits for a short period while we see if things improve or worsen. Most of our administrative team already has the capability to work remotely, and there will be plenty of work to keep them occupied full time, unless we need to totally shut down.”

And the retail labor market fell apart, with the employment index plunging from the already weak -1.0 in February to -28.4, which remains higher than during Financial Crisis 1 and, as the above comments suggests, appears to be lagging, as employment decisions have not all been made yet, but with more deterioration to come (as evidenced by the index of future employment, which plunged to -46.1):

These responses from companies in the services sector and in the retail sector – while limited to Texas – give us a first inkling of how hard services and retail are getting hit. Services account for 70% of the economy and include the biggies of finance, insurance, healthcare, information and professional services – all of them with many well-paid workers.

And that outright collapse of the data in March shows the magnitude of the shock of the COVID-19 lockdowns.

Texas manufacturing first got hit by the Oil Bust then by the Coronavirus. Expect similar confluence of unrelated factors in other states. Read…  How Will COVID-19 Impact US Manufacturing? First Indications Are Ugly. Exacerbated by Underlying Conditions

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  220 comments for “Foretaste of the Lockdown-Driven Collapse in the Services & Retail Sectors: Holy Moly, What a Catastrophic Mess

  1. DO says:

    This collapse in services scares me more than the virus. I have a friend who works in the airline industry and she was asked to take a 50% pay cut plus mandatory vacation. Of course those at the top already made like bandits and are gonna get bailed out with OPM, as usual. They don’t have to worry about little people things…F….ers. This virus is the perfect excuse and they’re gonna use it bc the majority don’t know how they get screwed. They think the economy was doing good but they dont get how much of the goodness was easy money, poor accounting, etc etc. Nothing to see…move along.

    • MC01 says:

      Just services? Think about this.

      Before shutting down pretty much everything nobody in the Italian government thought to fight a respiratory illness hospitals would need, I don’t know, oxygen.
      Besides air liquefaction plants starting to break down due to lack of spare parts, there’s a dearth of oxygen canisters but it cannot be coped with because the factories manufacturing them and their valves have been shut down. We are getting emails from hospitals asking for any working oxygen canister… it’s heartbreaking and infuriating at the same time considering we have the factories to manufacture everything right here. There’s not even need to retool, just to restart the production.

      I won’t even get into the mind-boggling facemask fiasco, obviously the creature of somebody who understands as much about industrial production as I do about courtship. You cannot set up factories merely by snapping fingers, and even if you could even the smallest factory needs machinery, lubricating oils, repair technicians, raw material… all stuff that’s simply not available because the whole country is locked down. The people who set up the Detroit Arsenal are doing cartwheels in their graves.
      I hope this fiasco will be forgotten soon and we’ll just do as Hungary has done: lease some idled aircraft to bring the supplies here from China. In the meantime we can get to work distributing the 12 million facemasks China has already donated and which are stuck in custom warehouses.

      This is the price we have to pay for giving way too much power without checks and balances to complete mediocrities.

      • mijj says:

        did China create the germ? Who told you that? Early rumours and conjecture were diven by the usual urge for China bashing that takes place at any opportunity.

        Actual evidence based research don’t support those early random attempts to pin cause.
        Actual research is too important to settle for rumour and finger pointing, satisfying tho that might be.

        All we know for sure is that China was the first to identify this particular problem.

      • Xabier says:

        Same almost everywhere, but with variations: the funcionario and political class in Spain are the same , Left or Right it really doesn’t matter…..

        • MC01 says:

          There’s already a widespread saying around here: “If the virus won’t kill us, the government will starve us all to death”.

          While people are still behaving admirably, the first signs of unease are starting to appear: an idle mind is truly the Devil’s workshop.
          People need to be given something to do, if nothing else at least planning for the “new normal”. Keeping them cooped up at home with literally nothing to do but to check the news (which chiefly consist of politicians with a bad case of the Caligula Syndrome) is just a recipe for troubles.

        • IdahoPotato says:

          @MC01, why should people have to do anything?

          Sitting still is a wonderful thing. Sitting still while watching the news is a terrible thing.

          It appears as though people are just terrified of their own company.

        • Shiloh1 says:

          Just returned from The Church Of The Sunday Long Run, midweek session, beautiful run in the woods! I’ll take that over a day in an office with narcissistic sociopaths any day.

      • Dave says:

        Say It Aint So,
        Actually virologists, epidemiologists and others specifically trained in the sciences to evaluate virus’s have said the COVID 19 strain is so elegant and complex only nature could make it, it is beyond our capabilities to produce.

        I would listen to these highly trained and credentialed doctorate degreed scientists before I would give a nanogram of attention to the asshat conspiracy touting idiots on the internet.

      • Joe Saba says:

        qx: was this BIO WEAPON created to
        1) de-populate old and feeble?
        2) provide cover for 1% to take even more control over 99.9% now newly created peasants
        3) create new world order with IMF and not merica in control
        take your pick

        but we now live in new world and order is not part of it

      • wkevinw says:

        Say It Aint So-As Dave said, the journal Nature has published a study by experts in the field that have concluded that it came from bats or other wild animals.

        Human DNA cloning leaves certain markers that are not present in Covid19.

        Also, a friend is an MD with microbiology emphasis, and agrees with this conclusion.

      • Ethan in NoVA says:

        It could have been created by nature but stored and studied at the Level 4 Virus research lab 2 miles from the epicenter of this entire thing.

      • joe says:

        It will be interesting to see how the approach Sweden has taken
        (ignore it and let herd immunity take over)
        compares to the social and financial suicide we have chosen. It’s beginning to look like you cannot do worse than what we have chosen.
        – destroy individuals freedom and liberty
        – reward the most criminal in government, media, and industry
        If the virus is as contagious as it is advertised, as soon as everyone comes out of their hidey hole they will get infected anyway. All it takes is another patient zero.

      • No historical analogies intended, but it’s going to take a fascist economy to keep the trains running. Says something about the underlying nature of all capitalist, democratic industrial nations.

      • Finster says:

        Compounding the problem is that too much easy money leads to malinvestment. Did we really need like 3.5 million smart phone apps? While our best and brightest were all learning to write code, our industrial base was being hollowed out. Turns out we really do still need things like bearings, valves, hoses, and whatnot. Machine tools and people who know how to use them. Not sexy enough to compete with gee-whiz stories that dazzle starry-eyed investors. So we outsourced all that boring stuff. Now we’re reminded of what can happen when we get too hasty with our capital.

        • roddy6667 says:

          Right now Americans are realizing that nearly 100% of medical, surgical, and hospital supplies are not made in America any more. Also, a large part of prescription drugs are made in China and India, with the packaging and marketing being the only part left here.
          These times may be a corollary to Warren Buffet’s axiom about not wearing pants and the tide going out.

      • Anonymous says:

        We are about to learn the value of real goods v.s. re-hypothecated goods of account. Or as the old adage goes…a bird in the hand is worth two in the bush. In this case physical bullion v.s. paper or masks v.s. masks you ordered.

    • mike says:

      We do not yet have a collapse of services, only of some services; some states are still reportedly operating normally. Right now, only NY and some other states are facing the tsunami of cases. Some, like California, have acted swiftly and may already be reducing the growth in the number of their cases.

      I hope that they establish some kind of quarantine and tracing program, or the explosion of infections that I predict will occur in other states may later also overwhelm California. As news reports show, travel is continuing in the south and central states.

      Only some of those states have now, finally, attempted to lock down. Thus, I predict that there will be huge clusters of cases scattered over those southern and mid-west states in weeks, when the incubation period runs.

      I do not wish them ill, but the failure to take precautions of their governors is like the federal government’s failures to test, trace, and quarantine in January 2020. Most of those states have not tested enough either. They truly have no idea of what portion of their population is infected. Many are apparently loyalists who may believe that this is another “flu” which will miraculously disappear in summer.

      The infections in countries experiencing summer mean that they are likely wrong. If so, expect another set of explosions of infections in a few weeks not in one state but in many.

      I sure hope that I am wrong, since catastrophic, economic damage and massive infections in most US states would make rendering adequate governmental assistance problematic. I felt the same way long ago when I watched some young, unwise people playing with large firecrackers despite warnings from me and others: I am just watching helplessly, waiting for the explosions and the trip to the emergency room.

  2. David Calder says:

    This is just March. I can imagine what April is going to look like.. If services and retail are 70% of the economy and it seems only grocery stores, hospitals, pharmacies, gas stations, delivery services, and a few other business that have been declared essential are operating then the next graph is going to need more lines.. I think the next run, panic buying, will be on red ink..

  3. Jos Oskam says:

    “It became necessary to destroy the economy to save it”.

    Nuff said.

    • 0disseus says:


    • AlbieOK says:

      What you said. ?

    • Petunia says:

      I’m still going along with the narrative, but … not believing it.

    • R Hughes says:

      How about “it was necessary to destroy … to save – but the .1% missed looking at all the ramifications and effects”.

      So you own a 500M yacht sitting in the ocean all isolated, you still need to get fuel, food, ect., no matter how much you have stored and what happens if even one of the 30 crew gets sick.

      • California Bob says:

        re: “So you own a 500M yacht sitting in the ocean all isolated, you still need to get fuel, food, ect., no matter how much you have stored and what happens if even one of the 30 crew gets sick.”

        Easy. He/she gets thrown overboard.

      • Jon says:

        If I am one of the crew member serving a billionaire
        I’d definitely throw him out in the open water
        One less vermin

      • TimTimNiceButEverSoDim says:

        One gets to have a quiet sense of shadenfreude..

    • Chalrez says:

      Indeed, having the economy destroyed was not really up to us once this virus got on the move.

      A managed shutdown gives us a chance to get back ahead of it and establish a “new normal” — wearing masks, not going outside AT ALL if sick, temperature screenings everywhere, etc. until it burns out or we develop a vaccine. The idea of the old normal returning before burnout or a vaccine is fantasy.

      • joe says:

        “until it burns out or we develop a vaccine”
        Unfortunately hope is not a strategy as someone once said.
        Do you really think the US will survive in lockdown like this for the 18 months estimated to create a vaccine?

        • Xabier says:

          That’s an optimistic minimum: 2 years at least, and quite likely no vaccine possible.

          We now need intelligent strategies.

          Hmm, that implies intelligent leaders…..

        • Chalrez says:

          No that’s what I meant by the “new normal.” The current restrictions let us get back ahead. Then have annoying but reasonable ways (masks, temp checks) to safely get many back to work.

    • Wolf Richter says:

      Jos Oskam,

      What’s more important: the stock market or the lives of 2 million Americans killed by the virus running rampant over a few months? Think of what kind of economy you’d have under those conditions.

      Even Trump, after down-playing it for a couple of months, has now come around to see the real dangers and mayhem caused by 2 million deaths, and millions more incapacitated for weeks or months. And that’s the scenario we would have faced had we not gone into “social distancing” mode.

      • joe says:

        Wolf – I have not heard of anyone talking about 2 million US dead. 100-200K. Comparable to other sources of death that we do not get drastic about. And that’s the extreme scenario. Let’s not talk about modeling predictions and educated guesses as future facts. Your guess may be right, but it may not. Sure there are a lot of sensible things that can be done. But we are destroying our economy. That will eventually kill people too.
        And the authorities we are supposed to trust are the ones who:
        – did nothing to prepare for this event, even though they scream about it in budget requests
        – at least tripled the cost of medical care in the US
        – spend money on gain-of-function experiments in their labs, that if accidentally released can cause exactly this type of pandemic
        – give away trillions to banks and companies that caused the financial crisis that made us vulnerable to any type of crisis
        – exploded the homeless population – just look around

        In Italy now the theory is that the large number of deaths may be due to susceptible people spared from the light flu season.

        Let’s monitor Sweden and see how they do with their alternate approach. We can compare and make mid-course corrections as evidence by facts.

        • Wolf Richter says:


          “Mr. Trump said that as many as 2.2 million people “would have died if we did nothing, if we just carried on with our life.”

          I actually heard him say that at the presser. This is all over the internet, and you can find it anywhere. Here is one of the links:

        • joe says:

          Wolf – the NYT reference you provided said 100-240K.

          “The scientists leading the administration’s fight estimated the virus could kill between 100,000 and 240,000 Americans. “

        • Wolf Richter says:

          You just read the subtitle

          READ THE FRIGGING ARTICLE UNTIL YOU GET TO THE QUOTE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

          You headline readers drive me nuts. If it’s not in the headline, it doesn’t exist for you people.

        • Realist says:

          The latest news from Sweden indicates that the Swedes are beginning to get cold feet. Too many have bought a plot already in a country that is lacking the mindset needed for bad times. Swedish mainstream (!) media are reporting on hospitals where doctors and nurses haven’t got PPE, the government is tweaking the rules for needed PPE downwards, care homes for the elderly without any equipment, some places even running short on soap etc Incredibly the official rules for medical staff who are suspected to have been exposed to the virus is to keep working and only if you show symptoms like cough etc, then you’ll be sent home without any testing…

        • VintageVNvet says:

          There WERE implications early on that this virus could kill between 1 and 2 percent of the population everywhere.
          Sorry I don’t remember where I read that in mid Feb time approximately, as this was ravaging local populations in Asia area, maybe SCMP, which is among those Asia news outlets I have read daily in recent years.
          However, as Wisdom Seeker has pointed out, that one and many other news sources, albeit major players with good reputations, do put up posts one day that are gone away the next day, or sooner, for various reasons, including ”generalizing on the basis of insufficient information.”
          That also may have been early speculation based on the eventual totals of the “Kansas” flu of 1918-20 era.

        • David Calder says:

          That 2.2 million dead in the US came from the Imperial College London and was reported by the NYT on March 16th..

        • Peter Goal says:

          At the Trump/CDC briefing, two days ago, the 100k-200k of expected fatalities was given IF all recommended measures/restrictions were followed “almost perfectly”.
          The two million expected fatalities projection was given (by Fauci and Co at the CDC) if the measure restrictions are NOT followed.

        • TXRancher says:

          Originally the the Imperial College London and the CDC estimated 2 million deaths. Then after real data was entered the math model estimates were revised down and then down again. Latest numbers say minimum of 200k deaths in US. We shall see if that is even correct.

        • Ed says:

          The latest numbers say anything from 40,000 to a couple hundred thousand. There are a lot of assumptions in the different estimates.

          The estimate that said 100,000 to 200,000 made the assumption that all the states would call for social distancing and keep it in place until June. There were other assumptions! This stuff is hard to put a number on.

      • How many people are going to die in an extended economic depression? Both presidential candidates are asking themselves that question. A sidebar to that is the choice to self-isolate, which may be almost as effective, compared to mandatory stay at home orders. They are already trying to figure out who is at risk, testing you to see if you are relatively immune, or in real danger. The various trade offs and who gets the blame are all being negotiated right now. If you don’t like the current version the next president will make decisions to lift the economy, and that will require sacrifices. By then the American people will be ready.

        • economicminor says:

          Playing catch up is the really hard part.

          In order to *save* people, ventilators and respirators and such are needed in huge numbers and making them isn’t just go into your garage and bang out a few. Factories need to be retooled and that isn’t something done inside that factory. Others make the gadgets and presses and thing a ma gigs that constitute any product. It requires hoses and electronics and gauges..

          With out a central organization, like a government agency, Who is in charge? How does anyone know how many will be needed or who will pay?

          For all those who wished for smaller government, this is why that is impracticable. No matter what you do, either try and head the virus off or let it run its course there will be devastating consequences.

          Human nature will most always vote to preserve human life over profits. Only a despotic dictator would chose profits over human life.

          As for what is going to happen to our economic system, well, all the history of markets, cycle theory, debt theory (Minsky etc.) and common sense said that our system was broken and was doomed to at least a major recession if not a depression. Sure the virus brought it on faster than it might have happened but all the signs were there. The US house of cards was already ready to collapse. The real question is what are we going to do next? Are we going to try to rebuild it or something different? This debt cycle is done. It is going to get unwound. There is no way the fed can stop it.

        • Ed says:

          If you can test as much as you want, you can keep the businesses open and test everybody to keep out the sick.

          The U.S. had to shut everything down because no one has any idea, any idea at all, how many of us are already carriers. The end game is to have enough tests to be able to test, track, and quarantine and then any shut downs would be limited and local. Will we be there this summer?

          I don’t know.

      • J7915 says:

        The US Army Mortuary unit ordered around 15k body bags for the liberation of Kuwait. So tell me what is was important, 15000 patriotic American troops, or the oil wealth of the Kuwaitis, who were in Europe during the hot season anyway?

      • Jos Oskam says:


        Thanks for your reply.

        Although my statement was meant to be a bit “tongue in cheek” I also wanted to provoke some thought about the effects of these blanket lockdowns. Not simply to advocate “doing nothing”.

        As you know, I am living in France, at this moment under very strict lockdown measures. I can not go out without having a signed and dated paper with me, specifying the reason why I am out of the house. So I get to see first-hand the effects of almost-total social distancing all around me. And I cannot help getting some critical thoughts about this.

        For instance, all measures taken are equal across the country, from the almost-abandoned countryside to the big cities. From parts of the country with almost no infections to other parts that are real hotspots.

        I see the devastation caused by these lockdown measures all around me. Small and medium enterprises shutting down, self-employed activities obliterated, “non-essential” commerces closing, you name it.

        And I might be completely wrong about this, but I cannot help wondering if the baby is being thrown out with the bathwater. Would a milder lockdown regime not be possible? Like just limiting non-local travelling, isolating elderly and people in weak health instead of everybody, focusing on contamination hotspots instead of effectively shutting down the whole country?

        It all seems so indiscriminately heavy-handed to me, I really do wonder if the resulting damage in terms of ruined lives, suicides, domestic violence, failed businesses and whatnot will not turn out to be greater than the gains from almost-total social distancing.

        I guess the jury is out until at least a year from now.

  4. HD says:

    Not that I’m not convinced the situation is pretty horrific, but is data from the oil state truly representative of the general situation? Oil is, after all, one of the hardest hit sectors and I presume a lot of local services and retail revolve around it.

    In a broader sense, now is perhaps the time for the US to reflect upon its position as top dog in a multipolar world (which, by the way, is an ever growing contradictio in terminis). Maybe the country does not need the capacity to destroy the world a hundred times over and neither does Russia for that matter. A lot of those billions going to the military would perhaps be better spent in other domestic areas. Disclaimer: I’m making this point as a member of the EU, confronted with an existential crisis of its own.

    I remember the days when communist general secretary Gorbachev overlooked an economy which was absolutely tanking, upon which he tried to secure loans in the West and manage a peaceful transition to a reformed nation. There was chaos in the nineties in Russia, but at least they didn’t try to solve their domestic issues through conflict and war. Maybe the Western powers should contemplate a paradigm shift of their own, focus less on military expenditure, reinvest and learn from the many mistakes the Russians made during their transition. Never let a crisis go to waste in a positive way, so to speak.

    If this reply is not on topic, feel free to suppress it, Wolf.

    • Wolf Richter says:


      Concerning your first point/question on Texas: the state has a huge and diversified economy. Oil is a big factor only in some parts of the economy. But, for example, in the metros of Dallas-Fort Worth, Austin, San Antonio, and others oil plays no significant role.

      Many states have pockets that are specialized. For example, the San Francisco Bay Area is specialized in startups. And those pockets generally don’t all move in the same direction at the same time — but now, a lot of those pockets move in the same direction at the same time. We’re going to see a slew of this fall-off-the-cliff lockdown data as it comes out.

      • nick kelly says:

        Most of the oil action in Alberta is nowhere near Calgary but about half its office space is empty, much of it previously occupied by oil cos. I assume Dallas has lots of same, and surely a lot of the Texas state budget is via taxes and royalties.

        • Wolf Richter says:

          The empty energy office towers are in Houston’s energy corridor, not in Dallas. And they’ve been empty since 2015/2016. And don’t confuse the HUGE Houston metro (population of about 7 million) with the Calgary metro (population of about 1.4 million).

        • Harrold says:

          Severance tax from oil provides about 15% of the state budget in Texas.

        • TimTimNiceButEverSoDim says:

          I’m sure similar things are happening in Aberdeen in the UK. It is the UK hub for the North Sea Oil fields.

          When I was last there at the end of 2015, large developments of office blocks near the airport, that had been planned when Brent crude was well over $100 a barrel, looked essentially mothballed.

          I guess they will be struggling again.

      • TimTimNiceButEverSoDim says:

        That’s it. Mass forced becalming of whole sectors.

        The UK housing market, for example, has essentially been frozen in time as all property viewings have been essentially banned by the government.

        Understandably so, but where does that sector now go for the next 8,10, or God forbid, 16 weeks?

  5. Realist says:

    I wonder how supply chains for groceries etc will be able to cope with the current situation. A lot of people ( singles, households ) do minimal cooking at home and now with restaurants and fastfood joints closing down, demand for groceries is bound to increase considerably and I wonder if suppliers to shops are able to manage this increase ?

    • X-Pat DE says:

      In Germany the crops are usually reaped with an army of cheap but skilled romanian workers. These have (withh small exceptions) been held back at the borders.
      They’ll be lucky to harvest 50% of the (admittedly “Decadent” crop of asparagus.
      The farmers, quite rightly, not knowing how long the lockdown will be enforced, are wondering whether to sow 100% of the next crop, as they “know” now, that they won’t be able to harvest it.
      This will cause shortages of the home grown crops, those which are imported are guaranteed to disappear from the shelves, at least in the short term, and prices (inflation) must surely explode higher.

      • MC01 says:

        Lack of white asparagus (spargel) may actually cause the whole of the Germany to riot, especially if people are stuck at home with nothing to do but look forward to the evening comfort food.
        It may turn hairy and I am not joking.

        I am genuinely starting to be worried, not about the virus, but about the consequences of this lockdown. Had we saved lives we could have taken comfort in that, but it seems we are not making a dent in the thing and every day the consequences of the lockdown become more and more evident.

    • Dave says:

      I read somewhere that the average American eats out ~35-40% of the time. So this would equate to possibly an equal uptick in demand at grocery stores. This would come at a time when people will be buying in mass/bulk quantities to ensure they have enough food for unforeseen supply interruptions.

      I am not sure how this will play out, but I assume it will be taxing on the supply chain for grocery stores.

      We might also see other countries cutting back on their food exports to ensure they have adequate supplies for their own citizens, thus exacerbating the supply chain issues.

      May you live in interesting times indeed.

      • timbers says:

        Been making almost daily trips to my local grocery store, Market Basket. Here’s my experience so far:

        Aside from very specific shortages, or non specific random shortages, it does not alarm me…yet, but I could be assessing this too casually.

        Any type of cleaning supply from liquid kitchen sink soap to paper towels/toilet paper almost 100% gone. Garbage bags too…I guess the “greatest healthcare system in the world” needs them for surgical attire and such at hospitals.

        My typical perishable grocery food basket consists of tomatoes, onions, avocados, broccoli, mushrooms, eggs, cheese, organic bread, and once a week a roast chicken which makes for 3 meals which I give to my 3 yr old Labrador mixed with organic beans and rice, so as to minimize his exposure to RoundUp and such in his non-GMO dog food. I’d would like to get organic dog food but the price is unreasonably high so I settled on non-GMO liberally supplemented with real, wholesome food. Once a week, I also mix wild salmon from Trader Joe’s (they claim their can liners are non BPH but not sure I believe them…what can you do?) into his beans and rice. TJ is limiting purchases to 2 of any item, and total customer entry into store.

        • S says:

          In one survey of grocery shoppers about mid-March when foot traffic in the stores had peaked, only 8% said they spent $400 or more to prepare for the virus lockdown. About 50% didn’t prepare at all at that date. So if there are supply interruptions or an extended lockdown, most all people will have to go back to the stores. Which means depleted store shelves, of course all depending on where you live.

        • HD says:

          At our local Spar supermarket near Leuven, Belgium, only a couple of items are hardly available: flower for bread completely missing since two weeks (literally nothing in the shelves – but available in abundance in Aveve, another specialised chain here) and TP is limited to one pack per costumer and in very short supply. South American wines missing now, mainly French wines available, which ironically this Belgian does not like too much. The only vegetables in short supply were mushrooms. But apart from these items, I don’t see many shortages here. I am living in a small community of about 20.000 white-collar inhabitants 5 kilometres from Leuven and 25 kilometres from Brussels.

      • Xabier says:

        In the UK that huge uptick in domestic demand crashed the ability of the supermarkets to deliver, both in-store and online, which is quite big here.

        It has stabilised a little now; some chains are still in trouble, like the one I have used for 7 years and which still won’t accept new orders, and others are on top of it.

        Next up will be real shortages of imported and domestic foodstuffs,and not just luxury ones.

        I continue to stockpile and increase my garden beds, esp fruit.

        And the local squirrels may receive new interest: ‘Damn fine eatin’ as a Kentucky girlfriend told me……..

      • Finster says:

        There’s a lot of overlap between the supply chains for grocery stores and restaurants. The food ultimately all comes from the same place; the difference is mainly packaging.

        So shifting supply capacity from restaurants to grocery stores doesn’t require a complete makeover.

    • Deanna Johnston Clark says:

      So far things are going OK…here in the deep south much is locally grown and only yuppies don’t cook.
      I have known people who can’t find their own kitchen, even for coffee….I guess they’ll have a learning experience and make lots of jokes about burnt toast someday!!

    • Wolf Richter says:


      What we’re now seeing is panic buying and overstocking of the pantry at home. This goes into a household’s “inventory” to be consumed later. This panic buying creates a huge burst in revenues for grocery stores and their supply chain. Those revenues are being front-loaded. And then when panic buying abates, sales will drop below levels where they’d been because by then households will be using their excess “inventories.”

      In total, growth in grocery sales is dependent on population growth, which is less than 1% in the US, and on price increases. So all combined, grocery sales are a predictable slow-growth business. And the panic buying just created a spike to be followed by an overshoot decline to be followed by a return toward trend. And the entire industry knows this. They’re now hiring temporary workers to deal with the spike, and they will let them go once sales begin to decline, which is inevitable.

      Shifting from restaurants to home-cooking doesn’t increase the food consumption. It just changes the channels in which food is sold, and it changes what kind of food is sold, including the packaging and portions. So there are some big shifts underway, with the supply chain for restaurants having to figure out how to shift to supplying grocery stores — and that’s not easy.

      • Realist says:

        “So there are some big shifts underway, with the supply chain for restaurants having to figure out how to shift to supplying grocery stores — and that’s not easy”

        An excellent point there, Wolf !

      • char says:

        Not eating in restaurants would be good for Supermarkets, but not having parties at home is bad.. So in the long run IMHO a wash. But supermarkets can now sell for a higher margin during the overstocking phase which i don’t think they will loose in the phase where the stock is consumed. .

      • TimTimNiceButEverSoDim says:

        I’m seeing seeing this locally in the UK.

        Local small chain supermarkets seeing increased in marked down items, such as more expensive pre-packed pizza’s, that are nearing their throw away date, in the offers sections.

    • dos tacos mas says:

      The supply chain is getting bollixed all over the place. From today’s LA Times:

    • Stephen C. says:

      Wouldn’t all the food normally delivered to restaurants now be diverted to grocery stores? Or is that naive?

      • VintageVNvet says:

        HUGE packaging delta: Most if not all food, fresh, canned, or bagged going to restaurants is in ”bulk” as in 60-100# bags,, ”jumbo” cans, flats or boxes with dozens or more fresh items 10# cheeses or larger, etc.
        Groceries in general are much smaller units of everything.
        You can see some of this at warehouse type retailers, especially those serving restaurants, though they usually have a combination of sizes of various food commodities.

      • p coyle says:

        the necessary arrangements will probably be finalized just in time for the restaurants to reopen, creating another mess to clean up.

  6. Anthony says:


  7. LeClerc says:

    One service sector that will recover nicely is barbers/hair salons.

    If Government help can keep them alive for a while they will have lots of work from raggedy-looking people after all this is over!

    • Ethan in NoVA says:

      I’ve been thinking if I could make a 3d printable flowbee type attachment for my beard trimmer.

      Oh how I wish I had gotten that haircut right before we went into this mess.

  8. Michael Engel says:

    1) Apr 1st ==> everything is fake.
    2) Houston oil cut capex, stopped buyback and click pink slips. Houston oil in terminal shape.
    3) Jamie Diamond is a buyback king with x3 good friends.
    4) BKX, the banking index hit support and bounced back.
    5) QQQ closed a gap and left behind a red selling tail, on higher volume.
    6) The DOW is a cluster cause.
    7) SPY had an upthrust.
    8) Opponent business media insinuate every negative, filter positive,
    sending the markets to Primary 4.
    9) US treasury issued $2.2T of 3M bills, sent cash to the states for delivery, but my $1,200 was lost in the mail. The state used my $1,200 to fund themselves.
    10) A small landlord own x6 apartment and one industrial spaces. One large apartment paid a full year rent in advance for a discount. The industrial tenant is closed and will not pay rent. There is hope for the rest.
    11) Eviction is out of question. Landlords must be patience. The last thing a small landlord need is an empty apartment during recession. Without eviction tenant cannot get housing support. There is hope that Jamie Diamond and his top x3 friends will show a lot of passion.

    • Shiloh1 says:

      Hi Michael. How low do you think the S & P 500 will go at any point in next 6 weeks. Thx.

  9. David Hall says:

    Some REITs are highly leveraged. Pipeline partnerships over-leveraged too. Airbnb cut into hotel profits. Mom and pop vacation rentals not generating much income. Commercial real estate is due for a correction. House flipping might flop. Someone paid $150 million for a house in California. A Chinese company paid a billion for a small hotel in NYC. People moved to Florida without bringing companies with them.

    People out sick for a month or two is bad news.

    • California Bob says:

      I keep seeing commercials on BubbleVision for ‘’ Supposedly, after they all but guarantee ’15-20%’ ROI they claim they’re ‘backed by $750M of high-quality RE’ (note: quotes approximate; I usually tune them out automatically). I smell some sort of REIT–if that’s what they’re calling the financiers that arbitrage mortgages into MBOs–and, presumably, these outfits are going to be wiped-out (or they should be, but they’ll probably make out like bandits with Fed funny-money). Anybody know the story? Usually, you see stuff like this on late-night TV, along with law firms advertising their latest class-action (Roundup, etc.), but these guys are advertising heavily on CNBC.

  10. David H says:

    I have to admit it is a fascinating study of human nature to see stocks rallying at a time like this. It is of course changing perhaps today when US stocks open; European markets are off 3-4%

    The point is I think up until the presidential announcement last night and reports from GS the governing narrative was for a V shaped recovery

    What does everybody think? Maybe a U at best, L at worst? I think the analysts keep bringing in new parts of the Alphabet and for now are sticking with W!

    • SocalJim says:

      In inflated dollars, it will be a V or U. In real dollars, it will be much better better than an L, but it will not be a V or U.

      • MD says:

        Based on what? None of this money that’s being created by the trillion is going to people on the high street. It’s being given to wealthy speculators to support a stockmarket now completely divorced from any semblance of reality or business fundamentals – just a casino.

        People taking on even more debt going to drive your grand recovery Jim? How? Everyone’s maxed out as it is.

        • Steve says:

          Don’t forget that it sets them up perfectly to swoop in and buy up all those soon to be foreclosed houses, condos and apartment complexes.

          True capitalism died years ago. Now we are just left with corruption of Government and corruption of Corporate leadership (I use this term very loosely).

          Its so obvious to see. Large Businesses get bailed out SMB’s get low interest loans that have to be paid back. George Orwell was a man way before his time.

        • timbers says:

          Solcaljim might be correct, because the Fed is doing a huge QE ramp up. Almost all of that QE likely goes to those who buy assets. And the Fed seem very proud of telling us how awesome it is at making the net worth of Americans go forerver higher.

          The Fed and Wall Street don’t need our economy any longer, to make the stocks go up.

          We’re irrelevant to them now.

        • JP in STL says:

          I agree. The reason “bubbles” are occurring more frequently now is due to concentrated wealth/inequality (1% of Americans owning 40% wealth) – with much of those additional funds being poured into the market. As opposed to those funds being more equally distributed for better use (housing, education, etc, etc)…

        • Shiloh1 says:

          @ Steve, in Chicago Crook County those vultures swooping in would have to compete with Michael Madigan and Alderman Burke.

      • Frederick says:

        You mean in real “ money” of which dollars is certainly NOT in that category anymore thanks to the FED and I feel better now knowing what you saw in your crystal ball

      • Ricardo says:

        Could be an A minus the horizontal.

    • MD says:

      Given the ‘prosperity’ of the last decade (or more) has been based on massive credit creation, artificial rigging of IRs, and the juicing of banks with amounts of money so large the human brain can’t really comprehend them…

      …what makes you think there will be any recovery at all? People certainly aren’t going to be paid more – we don’t do that because we ‘don’t want to end up like Zimbabwe/Venezuela/Weimar Republic’ (take your pick) – – so that isn’t going to create demand. People generally have little to no savings, and massively underfunded pension provision. Many don’t own homes to use as cash dispensers (more borrowing).

      So what’s the mechanism to drive your ‘recovery’? Because TBH I can’t see one.

      • Rcohn says:

        During the Weimar inflation , workers were paid twice /day. As soon as they were paid they would rush out to buy goods before they ran out.

      • Gordian knot says:

        So hyperinflation for the 1 percent and a deflationary collapse for the masses.

      • rhodium says:

        Real increase in purchasing power via deflation? Well… Consumer demand is obviously going to struggle. People will buy what they can after what they need, which means businesses that survive and sell to consumers (if still in a competitive market) will just have to find ways to lower prices in order to keep up revenue and margins on the aggregate. If unemployment is high it should be easy to find people willing to work for cheap (see how that works? Race to the bottom until employment starts to recover). However, that presumes that employment will not continue its abysmal trends. The employment to population ratio was going in the direction of really bad, then it started to level off, and now with all the newly unemployed from this I’m worried it’s going to continue in the direction of really really bad. That metric alone explains the lack of wage gains over the last decade (assuming people actually wanted jobs), rather than the official unemployment rate, and if it keeps trending in that direction, then as long as factories reopen and the possibility of supply exists, then that is also why I do not ultimately expect much inflation from this scenario. Even with the insane stimulus measures I simply see it still looking like we are turning Japanese.

        • nick kelly says:

          If your income remains stable, deflation increases your purchasing power (and inflation erodes it)

          During the Depression in Canada, the standard of living of a Dominion (Federal) civil servant rose by at least 20% in spite of two 5% wage cuts.

          The gang on fire, police, teachers, bureaucrats etc. salaries and pensions are going to be winners. How much depends on how severe the deflation and how much (if any) they are cut.

          PS: after 2008 when cash strapped Vallejo, Cali, was in negotiations with the police, the cops suggested closing the libraries to pay for an increase.

      • Old-school says:

        Too much debt is going to equal slow real growth. The way the fiat money game is played this is going to mean more debt with financial repression for debt holders. So much is pulled forward even stock market returns. Means working longer, saving more or lower standard of living on the whole. Wild Fed policy and big government deficits are telling us the economy needs a ton of juice to function.

        At the individual level we can try to make good choices to try to achieve what will make us happy.

    • Lance Manly says:

      As I mentioned on a previous thread, the rally had an underlying technical reason. 401k targeted date funds and pension plans need to balance their portfolios at the end of the quarter. So with the huge hit to stocks they were way overweight in bonds. They had no choice but to buy stocks in order to stay in line with their prospectus. Everyone on the street knew this so they were sitting like lions waiting for wildebeests to come down to the water hole so they could front run them.

      Looks like the fund managers went in a bit early trying to buy into weakness as opposed to waiting until the last minute into a rally. But when they did come the algos exacerbated the move.

      Stocks should decline a bit without this inflow.

      • wkevinw says:

        Lance Manly- agree on the port rebalancing.

        The interesting thing about (modern?) bear markets is that the hedge fund cowboys (and supposed sober fund managers?) use a lot of leverage. (They don’t follow the “usual rules” for “investment”.)

        So, during volatility you get a bunch of margin calls/covering which leads to sales of several asset classes: example- when bonds actually sold of a few weeks ago at the same time as stocks. That’s margin calls (sell whatever we need to get cash).

        I am also suspicious that when the market makes huge moves that the algos “give up”/can’t respond (see the history of LTCM- the nobelers’ algos broke down). The humans take over at the big firms- and do the usual thing – panic, at least a little.

        • Petunia says:

          Programmers of algos can’t code for events they can’t anticipate, like the Russian default that killed LTCM.

        • A Citizen says:

          When algos ““give up”/can’t respond” the underlying issue is a liquidity shortage (Petunia mentions LTCM) and associated widening of bid/ask spreads. This is visible in increased volatility.

  11. John says:

    If I remember right Texas was the state booming after the financial crisis, before other states. Whoa!

    • MC01 says:

      In this epidemic there will be winners and there will be losers: the winners are the countries that will be able to restart their economies at least partially earlier than everybody else. The losers will be either those unlucky enough to get to the peak of the disease later or those who will keep their countries in full lockdown for too long.
      China has already restarted and Korea never really shut down, opting for an aggressive containment plan instead. These two countries will make a killing this year: they are the winners worldwide.

      In the US… it’s very hard to tell who will be able to restart earlier than anybody else because the peak is still a few weeks away. Italy’s and Korea’s experience seem to point this disease doesn’t die out in a neat straight line: it zigzags lower, and even when the downward trend has started there may be very virulent local outbreaks that skew nationwide numbers.
      At the present rate some provinces in Korea may report zero cases already this weekend and the present predictions hint provinces in Italy will go to zero cases one by one over a two/three weeks timeframe (not satying when…) : the US will very likely go through a similar experience, with some States being at zero cases earlier, or even much earlier, than others.

      • Wolfbay says:

        Why not just follow South Korea’s successful strategy? Everyone wears masks(even home made masks help quite a bit to limit spread), ramp up testing and phone app that updates areas with clusters of infection.
        WHO and CDC are wrong but CDC will have to at some point recommend masks for everyone.

        • MC01 says:

          Wolfbay, the big problem is that this thing is now everywhere, and as more swabs can be done per day new cases shoot into the stratosphere. Just look at Italy as an example: it’s not that the epidemic is getting worse, it’s just that we are testing more people with light symptoms and they are turning up positive. That’s why those big drops and big swings in new cases over the past two weeks.
          People with light symptoms are quarantined at home, but it takes at least 14 days for them to get a clean bill health of health, but they add up to the number of total active cases, which in turn makes planning a return to normal harder, and send the media in a feeding frenzy.

          That’s why I have been vigorously campaigning for building up stocks of facemasks and disposable gloves for the population and for a cautious return to normal, not the insanity our government wants, meaning to wait for zero new cases and then letting everybody out. At this rate not only we’ll be in lockdown forever, but we’ll be sorely unprepared for another outbreak. I don’t about you folks but this is an experience I don’t want to repeat ever again.

        • Harrold says:

          Testing is sort of pointless at this point.

          We should just assume everyone has the virus and plan accordingly.

        • Gandalf says:

          CDC as usual is COMPLETELY FOS.

          These are the same idiots who proclaimed in the early AIDS epidemic in the 1980s that women couldn’t get AIDS.

          Trust your common sense, NEVER TRUST the soothing reassurances of the totally F****D UP CDC!

          I feel for the poor anesthesiologist in El Paso suspended by the University Hospital there for wearing a mask everywhere in the hospital. Those idiots running that hospital should be sued and crucified.

          At my hospital, they are handing out plain surgical masks AT THE DOOR TO EVERYBODY. Everybody inside walking around is wearing a mask!!!!

          In all id Asia, they think we’re crazy not to have everbody wearing masks

        • California Bob says:

          re: “…I don’t[sic] about you folks but this is an experience I don’t want to repeat ever again.”

          It will happen again, no matter what we do (or don’t). Nature will have the last say.

      • Paulo says:


        I believe folks have to get along and cooperate before any meaningful recovery will occur. I’m not sure the US system is conducive to cooperation. Even health care is a profit making opportunity, for God’s sake. The different states cannot agree on social distancing, with red states still proclaiming everything virus is overstated. There is nothing in place to pull people together!!! Certainly not federal leadership.

        Now, I said the US system is not able to adjust. I don’t lump in the people of the US into that conclusion. Sure, many won’t adapt, but most will because they have no choice. But this isn’t a cowboy frontier movie and the big bad govt isn’t out to take guns and liberty away. They just want to stop the infections from rising, it’s as simple as that. If people cannot accept that fact, then more friends, neighbours, and family will die. Those NRA bumper stickers , “I’ll give you my gun when you pry (or take) it from my cold, dead hands” , doesn’t bode well for cooperation and getting back to normal. That attitude isn’t accepted in most of the World. Exceptionalism isn’t supposed to include the highest infection numbers and rates in the World. Something is seriously out of whack.

        Maslow said it best, “if all you have is a hammer, everything looks like a nail”.

        If everything is an opportunity to make profit, then common good will not flourish. Some will recover quite nicely and make out like bandits, but most people will not. This is a time to change, and survival might force it.


        • A Citizen says:

          So those that “recover quite nicely” need to “change” for the greater good.

          Please define the profile of those that “recover quite nicely.”

          Then define “change.”

        • Nodak65 says:


          I grew up in North Dakota on a Ranch /Farm, You Know the “Peace Garden State”, I will still Take US Gov over Canada and most of all I will Still take US Health care system over Canada Health care any day of the week! P.S I think them”royal folks” you Canadians are attached To have caused way more division in the world Than any US President!! P.S.S Wife is a Nurse and Daughter in HC admin

        • noname says:

          Get your US Derangement Disorder checked out—QUICKLY!

          Never misses a chance to rag on the US—EVERY POST!

          P.S. Take a look at those being told to isolate by police—THEY AIN’T TRUMP VOTERS!

          P.P.S. There are no “red states”, nor are there “blue states”.

    • Bill says:

      Indeed Texas came out of the financial crisis pretty fast. A big part of that was the contribution made by the trainloads of money that were being drilled into the ground in the shale oil gold rush. I do not believe Shale Inc will have the BS to attract the trainloads this time. I’m afraid my state is in for a rough time. As a conventional oil producer I am pretty much roadkill and have no sympathy for either the loaders of the trains or the BS artists at the other end.

      • Beans says:

        Also, Texas had banking rules that limited the ability to cash out refi leading up to 2008. So while other areas of the country saw homes turned into ATM’s and the accompanying increase in home price, Texas homes saw a minor increase in price. It saved us from the severity of the 2008 GFC and laid the groundwork for the current boom (now busting in spectacular fashion).

        • Ed says:

          Put another way, it is the Savings and Loans Crisis, which really hammered Texas that saved Texas in the 2008-9 crisis.

          After the S&L Crisis, Texas drafted laws regulating loans, regulations tighter than much of the country.

          Texas consumers were no more careful, I am pretty sure! They just weren’t allowed to do what a lot of other states allowed.

    • Ripp says:


      Texas also wasn’t playing the housing bubble game prior to 2008. Prices never got to the insane levels like they did in other places.

      Can’t say the same thing now…

  12. SocalJim says:

    My opinion … the shortages will be in anything and everything from China. Good luck finding repair parts for your cars and appliances. That new TV? Forget it. Home building will struggle for supplies. It will all be just like food. Once the plumber figures out that kitchen faucets are not as plentiful, plumbers will panic buy faucets. Electricians will panic buy switches. The list goes on and on. Inflation will jump. Will prices double? Perhaps. Retired people will find out that all that saved money is not going very far and will return to work. Our president was right … China is THE problem. The entire country needs to work with him to get out of this mess.

    • Kent says:

      China is not the problem. It’s the idea that you can trade treasuries for finished goods that’s the problem.

    • doug says:

      ‘China is THE problem.’
      Wow, you see no issues in the USofA?
      something about the mote in ones eye….

      • A Citizen says:

        socaljim is absolutely right. The Chinese deployed military forces to the breakout area 18 days before their government publicly recognized it. Then they obfuscated their data and refused to allow international experts in. For weeks.

        I’ll take my mote and raise you a telephone pole.

      • timbers says:

        The internets say it’s true so it must be. The internets are smart. “Anonymous sources” say so and they are from the Intelligentest Community.

    • 635 says:

      Better get down to the gun store and pick up another 1,000 rounds

    • Anthony A. says:

      Where are these “retired” people going to find work? No one wants them and they are essentially unskilled at that point in their lives.

      • RD Blakeslee says:

        Foolish stereotyping of retirees. Do you actually know one?

      • Saylor says:

        I guess I’m a retired person (due to an ‘at home’ responsibility) But I have 20 years manufacturing management (mostly in quality programs)…., I’m thinking I may be considered ‘desirable’ in the coming months if the momentum brings back ‘off shore’ work.

    • rhodium says:

      With modern smart factory technology which has come a long way in the last ten years, factories don’t need nearly as many people to operate them and so labor costs are not the issue as much as they were. The reason we don’t have more in the U.S. (although anecdotally I’ve been hearing about more trickling in) is probably mostly an issue of the massive capex it would require upfront to move everything over. It’s far easier and less risky for companies to leave it all in Asia. American companies need policy incentives to move it to the U.S., but the cost structure of building factories in the U.S. as opposed to just closer like Mexico (thinking construction wages) still makes things difficult. It makes no difference to rich Americans, but American wages in the 80th percentile and below are too high in the context of a global economy. At the same time they are the brunt of the consumer economy. The paradox will solve itself one way or another as income inequality gets worse or the politicians figure out acceptable protections.

      • cas127 says:

        “but American wages in the 80th percentile and below are too high in the context of a global economy”

        But they could be adjusted downward (increasing American intl competitiveness) if rent/mortgage costs were lowered.

        The Fed’s asinine, ZIRP led multi decade “War on Deflation” (otherwise known as productive efficiency) has created an insane housing bubble that has made housing costs (and therefore US intl competitiveness) much worse.

        Also, any restrictions on residential construction supply force up its costs and therefore force up the cost of factory goods, lowering American intl competitiveness.

        • MarkinSF says:

          Nothing destroys an economy like high real estate prices.
          It’s like eating your own fat to survive.

      • elysianfield says:

        “American companies need policy incentives to move it to the U.S., ”

        …Or they need the Federal Government to mandate the move….

        Yea, Fascism, I know….

    • Cas127 says:


      1) “Shift spending away from air craft carriers” – Considering the lack of contingency planning/war footing that has operationally idled that AC in Guam, you may be right. Also, there is no more likely “acceptable” target during a limited nuclear exchange than an AC on the open seas (lack of civilian collateral casualties alters the political/Lex talionis calculus). China won’t wait for US F18s to continually bomb their coasts, they will just nuke their home carriers on the open ocean.

      2) Very, very interesting Marine Corps “blueprint” released in last few days. I have never seen so fundamental a proposed shift in force structure proposed by a branch *itself* – normally the branches fight to the death *any* changes to how they fight/are organized – they spend a huge amount of energy fighting commonsense reforms.

      For the MC to volunteer fairly radical changes (giving up entire weapons systems!!) suggests that maybe somewhere in DC the word has come down that the US really is nearing the end of its resources and that the Mil is going to *have to* scale back.

      If a second branch comes out with a similar reform blueprint, that would really bolster the argument that DC has realized it has (after decades of warning) reached the end of the line.

      • VintageVNvet says:

        Been fascinated to see the Corps changing the paradigm, first as always, (except perhaps during WW2 when the SeeBees were sometimes waiting on the beach with the keys to the Quonset huts, etc..)
        Been saying on for a while now to stop already with the ACs, tin cans in any form, etc., as they are just sitting ducks these days, though they may give a couple hours respite to the boys and girls piloting the drones, missiles, etc., in the way way back.
        Time and enough to put ALL the budget, just one year’s budget would likely do it, to work domestically to rebuild at least the capacity for what are so obviously critical needs; this is not the first, and will very likely not be the last of the world wide germ/virus based attacks, no matter how or when or where they start.

      • Gandalf says:

        Actually not that impressive.

        Reading the details, basically the USMC will no longer try to be the US Army and will focus instead on attacking China’s Spratly islands and other island fortresses in a future conflict

        Er, and how do they even get there if the US Navy gets blown out of the water?

        Plus, the US will have to reverse 40 years worth of globalization and off shoring production of EVERYTHING before we consider making war on a nuclear armed opponent.

        The list of things and critical parts for things we don’t make anymore is HUGE

      • Gandalf says:

        Not to mention the whole existential question of war between nuclear armed nations

    • You need to read more about this. The gap in conventional forces creates a disparity in strategy. US strategy is to threaten nuclear attack, while we continue to downside conventional forces. Russia and China have larger conventional forces. The mismatch in force and disparity in strategy creates an opportunity adversaries to make limited military operations which gradually escalate. ‘A’ uses conventional forces believing ‘B’ will not use their strategic defense. Russia could send tanks into Ukraine, assuming the US would not use nuclear weapons. The think tank response is to encourage the US to develop more tactical nuclear weapons. The use of tactical nuke demands you keep a minimum number of conventional forces in the field. An aircraft carrier can function on about 1/3 of the crew they typically carry. The delivery vehicle for these tactical nukes would be aircraft, being highly mobile launch vehicles, nested inside a networked defense group. That’s just the Navy talking in me :)



  13. TW Theron says:

    If you can believe the numbers China had 68 new cases of the virus yesterday and currently 2610 cases total. Those companies that have an effective end game for this pandemic will be the winners. Yesterday Walmart stated that all employees would be getting masks and gloves, temperature taken when reporting to work every day. These measures and other similar actions should help to shorten the downward trend. Still it is going to be a long summer.

    • MC01 says:

      TW: healthcare authorities here in Italy have been locked in a cold war with politicians and bureaucrats over the “aftermath” since the epidemic began.

      Healthcare authorities have warned, time and time again, that there will be localized clusters and isolated new cases for weeks or even months: neatly jumping to zero new cases and staying there is just wishful thinking but sadly politicians have staked it all on the childish assumption “full lockdown until zero new cases and then everything back to normal” and we are starting to see what trusting these folks implies.
      The downward trend in Korea and, hopefully, Italy hints this disease doesn’t die down in a neat straight line. Some areas go to zero cases far sooner than others and there are both local outbreaks and “third waves” of new cases, mostly light, that skew up nationwide averages. This requires continuous adjustments to containment procedures, not “one size fits all” approaches.

      That’s why planning for the “new normal” is so important, but it should have been already done. To stay in my little world I cannot stock up on disposable nitrile gloves because my vendor has been forced to shut down. Same thing for the half-mask filters we are presently using: vendor closed, and likely to stay so for at least two more weeks; I’ll run out of filters eventually and then what? I could go on for hours.

      I am just a humble chemist, not a virologist, but I think wearing a facemask and disposable gloves as an epidemic dies down is pretty damn important, so why aren’t we burning the midnight oil to ensure we have enough of the stuff?

  14. Michael Engel says:

    1) Houston oil will stay in the ground.
    2) The German gov financed its war with debt, like everybody else.
    3) The newly born Fed was buying Libery Bonds. The Liberty Bonds became junk in 1921 and needed a pump.
    4) The German gov financed a miner strike with debt.
    5) The loss of energy resources in the east & in the Ruhr Valley in the west was the cause of hyper inflation, not reparation.

  15. doug says:

    We are sheltering in place, and not ‘locked down’ which is a prison term as far as I know.
    I think we should reserve ‘lock down’ for if and when that occurs.
    Thanks for all you do, Wolf.
    Mug is handier than I ever thought it would be.

  16. Tom Stone says:

    Any company attempting to buy PPE from China would be well advised to read the recent posts at “China Law Blog” about how to reduce the very serious risk of being scammed.
    If your firm is based in a Country that is part of the “Belt and Road” initiative you are SLIGHTLY less at risk.
    When 90% of the purported suppliers of PPE turn out to be fake failing to perform due diligence is…still common.

  17. raxadian says:

    Do home delivery or lose your home.

  18. Michael Engel says:

    6) When Liberty Bonds, Fed biggest asset, became junk US treasury
    used its pump.
    7) Lincoln hwy coast to cost was completed in 1928.
    8) The backward country parked farmers money in NY Fed and
    NY Fed finances wall street fun games and GB.
    9) Wall street financed new car, electronic, mining, utility and aviation industries.
    10) US became an industrial superpower with highest
    per capita in the world, protected by GB navy financed by higher and higher debt.
    11) When GB exchequer demanded that NY Fed must cut interest rates to prevent the flight of gold from its treasury, NY Strong obeyed.
    12) Cutting interest rates by NY Fed poured fuel on the DOW flames. It ignited the last vertical jump to 1929 all time high.

    • wkevinw says:

      Michael Engel-for those that haven’t ever studied this, there is a lot of little known truth in these last two posts.

      The world “police” transferred from GB to the USA. The processes were: WWI, Depression, WWII.

      GB was “stronger” than the USA as a world military power in many ways until the early 20th century.


  19. Joe says:

    There is a growing number of people recovered from the virus who can soon go back to work in ‘real’ jobs.

    • Lance Manly says:

      At the moment it is 7,251, not sure that is going to make much of a difference.

      • Harrold says:

        There are many asymptomatic people. How many? We don’t know because we only test those with certain symptoms.

  20. Rcohn says:

    The oil decline will be of biblical proportions.
    At current prices all E+P companies except for a few will be insolvent.
    Most wells in the Permian will be forced to shut down because storage capacity is within 2 months of being filled. This will in turn effect the pipeline companies , which will face counterparty risk.

    • andy says:

      They can start fracking old empty wells and start filling them up.

    • Elmer Fed says:

      Trump is calling for a flat import tax on all oil to USA at $50/barrel, not only will that create cash that Trump can use to bailout his hotel chain, but the USA public will not even notice that gas goes down, besides they’re locked down, how could they know anything?

      All is relative, print to infinity (FIAT), import all the OIL you want at $50/barrel, or use shale tax-free.

      The ultimate ship-in-bottle economy.

  21. Crush the Peasants! says:

    It’s critical that liquor and pot shops remain open.

    • Seen it all before, Bob says:

      Liquor stores MUST remain open for making hand sanitzer! Pot cures almost everything. Do you have any articles showing it cures Covid-19? I bet I can find one or a dozen. :-(

      • IdahoPotato says:

        British American Tobacco claims it is making a plant-based COVID-19 vaccine with tobacco. Pot may be next.

    • Ethan in NoVA says:

      Liquor stores need to remain open because alcoholics will hit withdrawal without them. Then they will end up at hospitals which is not a good thing at the moment.

  22. andy says:

    Last time I checked the FAANG is still priced at about 5 Trillion dollars, but now probably closer to 40-50% of GDP.
    Someone failed to inform the great tech the great depression is coming.

  23. Satya Mardelli says:

    A $2 Trillion infrastructure bill will have our construction people busy for 10 years.

    • timbers says:

      Wait until we can see the details. If it’s like past “infrastructure” spending proposals, much/most of that $2 trillion will go to Wall Street and privatization schemes giving away our public infrastructure to private monopoly. Kinda like the previous $2 trillion give-a-way.

      • Tom Pfotzer says:

        Serious question: can any of you point to a major durable benefit to your community that was paid for by the 2008 bailout boondoggle?

        I like the idea of stimulus, but the execution of it seems to never go right.

        It seems like we should put the money into the hands of an individual that will spend it on something of durable, long-term value.

        We could generate a list of “pre-approved projects” that stim money could be spent upon. Such as:

        Insulate your house. Buy an electric car. Install solar panels. Install an orchard. Renovate the basement, install work-at-home office.

        Join a group of 20 or more families, and build a:

        Community composting facility. Community garden. Community solar plant, technical school, maker-facility. Community-scale printed-circuit-board mfg facility. Community greenhouse. Community music hall (caelids, for you Irish/Scots).

        Stuff we could actually get some value from.

        • Harrold says:

          I got a bunch of new highway lanes that are currently empty at the moment.

    • Barbie says:

      You are seriously overestimating how much is spent on labor for a massive construction boondoggle. That money will be stolen, and very little of that will reach workers salaries. And most of those workers will be low wage workers imported for the jobs.

  24. DR DOOM says:

    Keynesian economists at the Fed are going to run the entire economy on printed fiat and at the same time prevent asset deflation in real estate and keep the stock market bubble inflated . I am also going to get a check for $1200. These guys are good . All I have to do is to start consuming on credit when they Ring The Bell for all clear.

    • Kaye says:

      I love the way how for a long time we’ve been told that “central planning” was the great evil. It was also evil to have the government picking winners and losers in the economy.

      Now we are told, the great perfect system of Central Planning will save the day. Everything will be wonderful because the Fed is now doing Central Planning for everyone. And that of course, the cronies of the people at the Fed are picked as winners, while those of us who don’t get invited to the cocktail parties will of course be the losers. They just haven’t told us the second part yet. But it will come later, when we are told that the Central Plan states that we must all lose anything that was helping us survive because now the deficit is so large and we have to save money in everything except the parts of the budget reserved for war, death, destruction and torture and for the operating of the large police forces and keeping more people incarcerated than the rest of the world.

    • California Bob says:

      Seems to me the ‘economists’ at the Fed are more of the Monetarist variety; at least, that’s what I learned in Econ 101/2. The ‘yuge’ infrastructure project that Trump stumped after being elected (Keynesian) never materialized but the yuge tax break for billionaires and connected corporations (Monetarist) did. Most are calling MMT Keynesian, but it seems to me to be a bastard hybrid of both schools. I stand ready to be connected.

      Full Disclaimer: Until a couple years ago Milton Freidman’s son lived down the street from me in San Jose.

      • California Bob says:

        ‘connected’ -> ‘corrected’

        • wkevinw says:

          California Bob- I agree that this type of central banking is monetarist in terms of being interest rate (monetary) policy. The deficit spending is supposed to be Keynesian, but is a corruption of that in my view. Keynes didn’t really call for deficits every where all the time.

          In the end, I am a believer in markets. The price will be discovered- it could take a very long time. And, the (true) “price” may only last a very short time.

          Touching the real price burns out the dead wood.

    • S says:

      That check for $1,200 ($3.29/day in 1 year) is going to be used by me to pay down the $3,000 in prepping expenses I have incurred since mid January. Heck, I have so little debt that I have been charging thousands more for recent silver coin purchases. I haven’t been paying off my credit cards because I thought I would get some type of credit card debt jubilee instead. Guess I was wrong about that one. I pay 16% on credit cards while the banks get free money to recapitalize. LOL

      • Shiloh1 says:

        I’m waiting for the credit card balance transfer “kiting” opportunities to come in the mail, like the ones from 20 years ago. Something like 0% interest for 2 years. There was always a new one to roll it over into. Yeah, Ag and Au.

  25. Iamafan says:

    Yesterday and Today the morning overnight repo were a big fat ZERO.

    • Cas127 says:


      A post about the rationales behind low repo demand would be welcome.

      You would think that during a crisis, short term borrowing demand would skyrocket – but from the comments I am indirectly getting that repo demand has cratered.

      Is that right? Why?

      • Wolf Richter says:


        But there is now so much newly created money out there, and the Fed is lending left and right, directly and indirectly to everyone except you and me, and banks are now bullied into borrowing at the discount window, so demand for repo funding has likely dropped to where the whole market is dozing off.

  26. DV says:

    I wonder what happens with Tesla….

  27. IdahoPotato says:

    Excellent book:
    “Big Farms Make Big Flu: Dispatches on Infectious Disease, Agribusiness, and the Nature of Science” – Rob Wallace

    However, the race baiters can’t do without their chicken nuggets.

  28. Charlie says:

    Wait a minute. I thought that the Services Sector would be the holy grail that was supposed to rescue economies while the Goods Sectors was experiencing an inflation. The great, brilliant growth of the Services sector was going to keep us all rich. It was supposed to be perfect. It was how “things are different this time” and why the business cycle had been repealed.

    • Xabier says:

      It’s like medieval armour: just great until you fall over in mud…..

      This virus has certainly found the Achilles’ heel of our global economy.

  29. Canadian says:

    In a world of two income families, a higher unemployment rate means more families have to live on a single income.

    That’s considerably different than the Depression, when most families were single income and a high rate of unemployment meant no family income at all.

    I suspect the massive surge in real inflation we have seen as a result of two income families will come to a screeching halt. We will also see some interesting societal developments including women in heterosexual relationships being the only income earner, and the rise of nontraditional family arrangements as a survival mechanism. More single income LGBT family arrangements as well.

  30. Cookdoggie says:

    Google translation: “the financial consequences of this crisis will make the financial crisis look like a small ripple on the sea one fine summer evening ..”

  31. gorbachev says:

    What I used to believe

    Tons of cash on the sidelines
    70% of all bus in USA service industry will protect us
    The Fed could solve all

    What I believe in now

    Humble pie

  32. R U Kiddin says:

    “the economic consequences of this crisis will make the financial crisis look like a little ripple at sea on a nice summer evening..”

    Much agreed or in Norwegian, Mye avtalt.

    • Saltcreep says:

      ‘Mye avtalt’ essentially comes across as ‘A lot of stuff arranged’. ‘Veldig enig’ would be more appropriate.

    • R U Kiddin says:

      US GDP= 21 Trillion
      60-70% shutdown INDEFINETLY
      Fed et al. threw 5-6 billion at stocks.
      Wall Street does what with this cash first? Pay themselves
      Economy won’t recover before it goes lower.

  33. Fred Flintstone says:

    The talking heads are cracking me up…..all discussing if we have already missed the great opportunity……..liars…..all of them…….there is a near or full depression coming and they want to sell stocks at 18 times peak earnings. HAHAHA! One dolt called himself a fiduciary. Stay the course……..until you’re broke.
    CNBC is better than the comedy channel!

  34. Tony says:

    Wolf, since the pandemic, your comments section has become the “jump to conclusions” section. It’s my turn to jump to a conclusion. Since the pandemic….global CO2 emissions have been down. This is nature’s way of telling humans to simmer down.

    • VintageVNvet says:

      Love it Tony!
      For many years, many people have postulated that earth, as Gaia, or any other similar nominal expression of personhood, will, sooner or later do what it takes get rid of the human scourge that has destroyed so much and imbalanced we/they/it.
      This thinking became especially acute when we managed to put together the technology to destroy all sentient beings and then increased that to the point of being able to destroy all beings, so that Gaia would have to start all over again, again.

    • Wolf Richter says:

      Yes, we’ve worked very hard here to improve our jumps to conclusions. Since the Olympics have been cancelled, we have set our own records here. Our champion’s jump to conclusions has already hit a record 25 feet.

      • California Bob says:

        re: “Yes, we’ve worked very hard here to improve our jumps to conclusions.”

        The perfect shelter-in-place exercise.

    • noname says:

      Your comment is no different than the religious END OF DAYS text messages and emails I’ve been receiving since this began.

      Both are incorrect and alarmist.

  35. Just Some Random Guy says:

    So far my income hasn’t been affected at all. Nobody in my immediate circle of family and close friends seems to have been affected either. We’re all fairly high income professionals. The type of work that can be done as easily in a home office as at “the office”.

    This appears that this is hammering hourly workers in retail, restaurants, hotels, etc. The type of jobs where you have to be physically present to earn money. But white collar peeps seem to be fine.

    For now.

    • Ethan in NoVA says:

      Tech professional here as well. The place I work at laid off ~500 last Friday. Skeleton crew remains to maintain spacecraft while they try to raise funding or figure out the future. Softbank walked from funding citing COVID / market damage, at least that is what the news says.

      I know of other tech workers where their employers have axed employees. I’ve heard the Austin startup scene has a lot of layoffs as well.

      • Just Some Random Guy says:

        Maybe I live in a bubble? I dunno. Either way I have enough put away that I could go a year without working and be OK. Add in some UE benefits and it would be a nice vacation. I’m not downplaying the severity of this, just giving you another side of things other than the OMG Everyone will be homeless next month drumbeat that’s out there.

      • Petunia says:

        Austin is supposed to be a rental city due to the high RE home prices. Median incomes are not high enough to justify median house prices. If they are getting hit with tech and oil layoffs, the RE prices there are in for a drop.

        • TXRancher says:

          Austin has many many suburbs and other commutable adjacent towns (Round Rock, Georgetown). Austin is also still surrounded by relatively rural areas. RE homes are still very reasonable if you shop.

    • jon says:

      The work which can be easily done from home office can be ripe to be outsourced to cheaper location when the push come to shove.
      This happened in my company where they are moving most of the work to cheaper countries when it can be done remotely.
      These all are high paying jobs $150K+/year

      • DeerInHeadlights says:

        Yes, they can outsource them but what happens in the next pandemic when the Chinese or Indian worker they hired there is unable to work because they happened to be in the next ‘Wuhan’ and were incapacitated by the outbreak, locked up for speaking out, etc.

        What SHOULD happen as a result of this is a decrease in globalization to make countries, especially in the West, less dependent on happenings across the world, but what *should* happen and what ends up happening are two different things. The extreme capitalistic / crony capitalistic state of affairs in the U.S. means a likely return to the status quo, if not immediately, then in the medium to long-term (aka next crisis).

    • Wolf Richter says:

      Just Some Random Guy,

      Tech worker friend of mine lost his job among many that the company laid off.

      But you’re correct. Not everyone is going to get laid off. In fact, most people, and hopefully you included, will keep their jobs or projects.

  36. Social Nationalist says:

    I could care less about services or not. Anything shut down is going to collapse. See 1957-58 recession.

    It also looks like this was juicing Housing Starts among other data in December/February……….remember that?

  37. Augusto says:

    Well, lets look at the bright side…there will be a lot of people around to help build the new “essential products industry”, making face masks, medical gowns, breathing equipment and pharmaceuticals, to name just the most immediate needs. Moreover, we should go to all the fat cats who made their fortunes off outsourcing to China (and now telling us how to live via MSM) and have them pony up the capital to make it happen in the good old USofA…of course they’ll probably talk about offsetting with India and Vietnam as alternatives……. and how they can get even richer….

  38. Michael Engel says:

    Apr 1st, Dr. Claudia Sahn ex Fed :
    IamOnWolf day and night.
    Fred deleted her best indicator that showed too much.

  39. timbers says:

    I’m seeing internets talk about exploding U.S. Federal deficit.

    I predict a Wolf Street article on deficits up the whatever, soon.

    • Wolf Richter says:

      No. The thing is as I said in those articles, we ran up those huge deficits during the good times, so what will we do during the next crisis? And yes, the answer is now here. Our gross national debt will jump by something like $4 trillion in a 12-month period. In other words, a couple of years of these types of deficits, and we’ll be at $30 trillion. Or by then 150% of GDP.

      • Something will break before that occurs. The issue is the transfer of wealth to the private side, is unprecedented. Corporate America always assumes government will plan for contingencies, like a pandemic. People who thought government would take care of them after the 1930s, became jaded, eventually turned Republican. Now those free market advocates are turning toward government, and massive bailouts. Deficits made sense in the first instance, while government was small. Now government is large and the free market is even larger, some draw down of assets to pay for all this, and the bulk of those assets are in the private sector.

  40. Michael Engel says:

    1) Apr 1st.
    2) Income is gone, but America is eating clicking WFC c/c.
    3) Expenses are cut to the bones, but rent is covered by BAC.
    4) How many people Wuhan will eliminate nobody know.
    What is known for fact is that the “Silk Road” to Long Beach is gone.
    Spider webs in our homes are cut and shortages will start.
    5) Paper oil traders might send WTI to $10, but Houston oil will stay in
    the ground.
    6) The 3M is hooked to zero, but when people will get jobs, accepting a
    pay cut, prices will rise too fast and the majority in the lower quintiles will be forced to finance expenses, using BAC & WFC to survive.
    7) UST 10Y will rise dragging the 3M behind like a child. The Fed smart response in stepping stones.
    8) The trend will be up. This process will not stop until the yield curve will invert at the top.

  41. Irishpeddler says:

    It will be deflation, which in turn will cause our government to issue a new currency backed by precious metals. The return to a gold or silver standard is mandatory. Deflationary damage occurs when people think that the price of an item will be cheaper in the next week or two, consequently greatly reducing the flow of money. This will of course have a huge detrimental effect on China and could cause problems of a severe nature.

  42. TexasHospitalWorker says:

    My wife works at one of the top rated heart hospitals in America, located in on of the largest cities in Texas. Census is 1/3 of normal as of last week, and they are cutting everyones hours by 10-50%. In summary, even hospitals are cutting employment, and those who need critical heart treatments are stacking up, leaving a lot of issues in the future that could have been prevented today. As much as Wall Street wants people to return immeditately to work and V-Start this economy, I think the emotional and financial damage due to lost income will last for a few years. Who is safe if even hospital workers are losing hours and their jobs? This will change the way we all live, hopefully for the better long term.

    Stay safe!

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