What if there’s two second waves? What I mean by this is we’ve already seen the first wave of the virus and the subsequent first round of layoffs (30 million jobs nbd). These jobs were in the line of Fire of the shut down and from industries that were struggling to begin with.

Think the sales clerk at Macy’s or JCPenny, the bartender, hostess, line cook, manager, and valet at a restaurant. The construction worker from the job site that got shut down. The admin at a doctors office. You get the point. These were the easy targets.

When the economy reopens what % of those people get rehired? For the retailer? I’d say half, at best. Restaurant? If you’re legally mandated to run at 25% capacity one can safely assume your staffing will coincide with that.. if you’re even in business still for the reopening.

You get the point. A fair amount of the 30 million jobs that have been lost these past few weeks aren’t coming back. Quite frankly, they won’t come back for a while if at all. “Stop being so cynical” - just hear me out, though.

The low skill labor that’s been lost (restaurant workers, leisure/hospitality, retail, etc. ) those jobs aren’t coming back. The opportunities that will be available for the labor pool being impacted here will be few and far between. This isn’t a 2 quarter story.

Now comes the 2nd wave of layoffs. You’re slowly but surely starting to see the corporate layoff announcements trickle through. Uber 20% of staff, Lyft 17% of staff, Lime 13% of staff, Boeing 10% of staff, Airbus, and so on

But these industries are directly affected by the shutdown so we shouldn’t see a similar scenario in other industries, right? Wrong. I think the prolonged expansion may have distorted our view on the degree of cyclically there is in the economy and certain industries.

I believe that we see the second wave of corporate layoffs come in mid summer when the C-suite starts to figure out that this won’t be a V recovery. I think advertising takes it on the chin here. When you need to cut cost what do you do? Lay people off and cut back on marketing.

I feel as if there is almost a consensus view out there too that advertising is somewhat insulated from this? Good luck with that. Whether you’re a Fortune 500 company or a mom & pop shop advertising on Facebook or google you’ll be looking to cut back significantly on ad spend.

The idea that these secular growers are insulted from the cycliclaity of the business cycle is wrong IMO. Are they better off than say traditional legacy media like Comcast? Yeah. But having a nice house in a bad neighborhood doesn’t mean your house isn’t in a bad neighborhood.

We are a service and consumption based economy. There is no secular trend immune to what will transpired over the next 12 months. We saw the first wave of the virus and job losses but we’ve yet to see the second wave of job losses come from corporate America.

I won’t dive into the second wave of the virus but it does seem all but inevitable. I have no edge there. Let’s hope for everyone’s sake that this part of the second wave never surfaces. I don’t mean to be cynical but I’m just calling it how I see it. #Macro #economy #COVID__19