01-03 Consumer Demand

My mother’s Sunday roasts were really something. But for the rest of the week she wasn’t much of a cook. And she was always serving wieners. Something I have never bought after 65 years of marriage. Why, I asked her?
Well, it was all she and my dad could afford during the Great Depression. Eating wieners became a habit. How about wieners making a pandemic recovery.
So much is happening to all kinds of economic activity during the pandemic. There has certainly been a monster drop in consumer spending. No surprise there.
And whether restrictions were in place or not, the natural drop in consumer demand is associated with anything purchased where crowds gather. Malls, theatres, airlines, restaurants, cruises, sports and entertainment facilities.
The interesting issue for business, as we slowly pull out of the pandemic, is whether consumers have developed new habits. Certainly large numbers of unemployed will be buying cheaper foods like wieners.
Habits are difficult things to change. At teacher’s college, I was told that before someone learns something new that will change their habits, they need to experience the new concept at least three times and in different ways. It could be a lecture, a group project or a visit to a company. It is a slow process.
But with the prolonged quarantine around the world, we should all assume people’s habits have changed, with monster consequences for businesses large and small. A lot of conventional retailers will just close their doors.
It is so interesting noticing food delivery trucks. It is modern online shopping. This is so convenient it is bound to be a permanent change.
My aunt’s dad did this during WW2, selling eggs, butter, cheese and other staples. The sign on his wagon was, “You can beat our eggs, but you can’t beat our butter.” The family had a celebration at the end of the war when he could get gas, and his horse-drawn wagon was replaced by a new shiny delivery truck.
All economists and politicians are trying to puzzle out what areas of consumer spending will be permanently in decline, what shifts in demand are underway, and what kinds of demand that is currently dead, will recover over time.
As someone who has flown to the various corners of the world over my lifetime, I have learned to hate travelling by air, even though I can afford to go via Business Class. The photo shows how scary travel is going to be in the future.
History is important here. During the Great Depression when demand and prices crashed, governments did not look to consumer demand to pull the economy back. The solution was infrastructure spending by the state.
And Infrastructure spending will spur recovery all around the world today for one simple reason. The lift from consumer spending will not happen until everyone can be vaccinated.