1 Apr. 2020

In the wave of the global pandemic, the world has seen significant overhauls in its economic activity. While the immediate changes are apparent with various businesses being forced to close in the short term due to travel bans and lockdowns, a less often considered question is on the long-term impact once the crisis has resolved.

Even once the worst of the health crisis has passed, it's likely that our cultural behaviour won't immediately return to what it previously was. While unlikely that people will continue to shun all social contact whatsoever, the current pandemic has forced those who might otherwise simply put health concerns out of mind to take an awareness of such matters.

As a result, even once they reopen, mass gathering events such as Movie Theaters and Concerts will likely find themselves unable to pull the same sheer number of customers that they were previously able to. While ordinarily such businesses could mitigate this fact by attempting to extend their premium services with larger personal space, they would run into a short run problem brought about by the lack of business, the fact that individuals in the large number of industries unable to operate during the lockdown will tend to have less funds to spend on non-essential items.

If the situation continues as seems to be predicted, intermittent lockdowns may become a recurring factor in life until a vaccine or cure can be developed and tested. This will significantly slow business in several industries. As a result, those businesses will typically be forced to cut production, and thus will not require as many workers. This will lower the average income in affected countries.

When people have less disposable income, they become increasingly more value oriented when spending it. It is to be expected that we may see a shift to cheaper substitutes for existing goods. For example, in developed countries, rice is typically found to be an inferior good, as the amount consumed has been found to fall in favour of meat products or poultry as income rises. Chemically treated foods tend to be considered inferior goods to direct organic alternatives when people are more interested in having enough to eat than the purity of the food. Video streaming services are typically a cheaper alternative to the experience of movie theaters. As a result, cheap, high value goods may find themselves remaining a larger part of people's everyday lives.

Finally, one of the largest industries to suffer from the crisis seems to have been the mainstream news media. Their handling of the viral outbreak that attempted to downplay the danger, thus lulling people into a false sense of security, and away from behaviour that would have helped to mitigate the spread, combined with the accelerated news cycle as world events became more active shortening the gap between contradictory statements has damaged the trust that many might have previously held toward these outlets.

While it's possible for these factors may correct themselves in the very long term, it's likely that the impact of these changes will continue to colour business in years to come.