Whatever you call it, we’re set up for a coronavirus recession

We had the dot-com bust, and multiple Boeing busts, and the economic calamity of the late Aughts was so severe that it was upgraded from a bust to the simple descriptive of The Great Recession.

So what are we going to call this one? The Coronavirus Bust? The Covid-19 Recession?

Some industry segments are already in the throes of an economic downturn. That downturn now threatens to sweep through the rest of the economy as fast as the virus threatens to overwhelm the population.

First to get hit are travel, tourism, entertainment and events – any venue or activity that involves putting large numbers of people in close proximity to one another. Some Seattle restaurants are closing because customer traffic has evaporated. In a conference call with investment analysts, Alaska Airlines executives said “material declines in bookings and increased cancellations began in late February; trends have not stabilized, making demand and revenue predictions difficult. We are analyzing the need to consolidate frequencies or trim flights that would operate at a cash loss in May and beyond.” Conventions, meetings, concerts and events like Emerald City Comicon in Seattle have been postponed. Opening days for the Rainiers and Mariners appear threatened.

The losses are already considerable, they will climb, and for businesses in tourism and hospitality they can’t be made up. In the retail business, a car or a laptop computer that doesn’t sell today can still be sold tomorrow. An unoccupied airline seat on a flight today, a hotel room that’s unoccupied for a night or a reservation slot at a restaurant at dinner tonight that goes unclaimed is a revenue-generating opportunity lost for good.

Speaking of retail, as more of society gets shut in or shut down, there will be fewer shoppers wandering the aisles of brick-and-mortar stores and shopping centers. Those retailers that can shift shopping to online, or that deal with staples and commodities that households are stocking up on “just in case” may get through this all right (Costco’s and Amazon’s next quarterly reports will make for interesting reading). But those in less time sensitive, more discretionary lines of retailing, already facing some major long-term challenges in their business, now have to scramble even harder and faster to cope with the short-term – this is going to be short-term, isn’t it? – crimp on customer traffic imposed by Covid-19.

Who will escape unscathed, or at least get off lightly? If you’re in the medical supply business this might be a good year for you. More broadly, the tech sector isn’t depending on one temporarily hot consumer product to sustain it; if anything those companies developing services that allow people to stay at home and not be within range of other humans while shopping, working, transacting business or being entertained might see a surge of interest in what they do.

The government, meanwhile, faces two tasks: shutting down the microbe causing all this mayhem while propping up the economy. Of the two, tracking down and neutralizing the virus will be the easier.

The economic problem is that conditions were already primed for things to go wrong. Trade wars have taken bites out of economies like China. The longer Boeing’s 737 Max stays grounded, the bigger the headaches facing that company, the vendors and suppliers supporting it and the economy relying on them. (Meanwhile, people are just beginning to wonder what happens if airlines start canceling orders for planes or going under in the wake of a virus-caused drop in passenger counts.)

The optimists will argue that there are a lot of factors and tools that will help stimulate demand and keep the economy from falling into recession: low interest rates and lower oil prices, to cite two of the most important. The pessimists (we prefer to refer to them as realists) would note that those same conditions – low interest rates and low oil prices—were present at the onset of the Great Recession, and that didn’t keep the economy out of trouble.

There’s so much unknown about Covid 19, how it originated and spread, what’s most effective at slowing down or stopping it, but how and how fast those questions are answered will determine how long, how broad and deep the new recession goes. Even a short-term shutdown is going to impose costs that, for some businesses already facing competitive or cost pressures, will prove too much to bear.

Businesses are doing their best to get by with temporary, patchwork arrangements. But if the disruption gets extended well into spring, more companies will run out of resources to keep those short-term coping mechanisms (can’t even call them fixes or solutions) working. Expect, then, to see more companies calling it quits or curtailing operations, and more jobs to go away.

Ever since the first tiny signs of recovery from the Great Recession appeared, we’ve been awaiting the arrival of the next one, and conjecturing as to what might prompt it. Its cause turned out to be as unforeseen as its eventual arrival was inevitable. But now it’s here, and as widespread, fast-traveling, tough-to-stamp out and harmful to health as Covid-19 is proving to be, the recession caused by and named for it may well prove to be just as injurious to the economy.