Lots of economic handwringing about the conoravirus. Here’s Insider’s take. The conoravirus is an exogenous shock, economic speak for an unexpected event which hurts the economy. 9/11 was an exogenous shock. Exogenous shocks may cause recession but the recession is not as long or severe as a financial crisis recession which is driven by too much debt (e.g. the 2007-2009 contraction).
Insider remembers the days after 9/11. No one flew on planes. Hotels were empty. Events and trade shows were cancelled. We were going to war. The stock market closed for a week and then dropped 14% on the first trading day after 9/11. But the world did not come to an end. Three months later stocks were hitting new highs. The US economy grew in the quarter of the attacks and continued growing after the attacks.
US Real GDP During and After the 9/11 Terrorist Attacks
Source: St Louis Federal Reserve.
Look at out of home revenues in the years before during and after the 9/11/01 terrorist attacks. Healthy growth in 2000, slightly down in 2001, slightly up in 2002, healthy growth in 2003.
Fast forward to today. No one is flying on planes. Hotels are empty. US Out of Home Stocks are down 27% year to date. JC Decaux says first quarter revenues will be off 10% Wash your hands. Get plenty of rest. Avoid large crowds. Home office. Get on with work. Coronavirus is serious but not the end of the world. This is a 3-6 month event. The US economy and the out of home industry are resilient.
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Dave,
I would like to commend you on your article this morning. “Wash your hands, get plenty of rest and get on with work”. I agree that the conoravirus should be taken seriously. People should do everything they can to mitigate the spread. Listen to the officials and follow their advice. But this doesn’t have to be a financial catastrophe. They only way it becomes a financial catastrophe is if people make it one. Use common sense, take care of your people and as you say “Get on with work”
Ted Bratsos
Great commentary today. The next 6 months should be one of the countries finer hours..
Dave – thank you for being a sound voice of reason. I agree with everything you wrote here. I think we have an opportunity in the OOH community to provide guidance, assurance, and valuable messaging to the public. We at Blip are also making some interesting observations. Will share more this week.