I’m as much in favor of reality as the next guy. Maybe more so. And during the coronavirus pandemic and the current economic re-opening I’ve been scarfing up every bit of data that I can. I begin my day by digging into the latest news of cases n Arizona, Texas, and Florida. And then dive deep down the rabbit hole to see how the data is being collected and what the “process” might mean.
But I increasingly question the utility of that effort when it comes to figuring out how the re-opening of the economy might be going and what the effect on stock prices might be.
Instead I’ve started to try to adapt a version of “early adopter” analysis from the tech world to the re-opening dynamic.
So today, for example, I got data on cases from Oklahoma–which registered another record for single-day new cases–California–which set another record in its rolling average–and North Carolina–where the average dropped by one case to break a streak of 15 new highs in a row.
I dug up anecdotal information from Facebook on the temporary closure of the R&J Saloon in San Antonio for a deep clean after a customer tested positive for the coronavirus. Another Facebook post from Taste of Texas in Houston announced that it had closed temporarily “out of an abundance of caution due to a positive Covid-19 test by a team member.”
Most interesting to me–and my new way of thinking about the re-opening economy–was news out of Jacksonville Beach that Lynch’s Irish Pub had closed after 16 friends who had visited the pub on June 6 became infected with the virus and that the pub had then tested employees and seven tests came back positive. The pub then closed for a deep clean. But it’s the next part that really intrigued me: The pub re-opened on Tuesday after that deep clean. And this pub wasn’t an isolated instance–other restaurants in the area had also closed for cleaning and then re-opened. (What I don’t know is how business has been at the pub since the infections and the re-opening.)
Any attempt to fit this last anecdote into a model of the re-opening that assumes that behaviors are driven by data is likely to lead us far astray.
A better fit is something like the “early adopter” model from technology that organizes consumer behavior into tiers. There’s a tier of consumers that will rush out to buy the latest smartphone just to have the latest phone. There’s another tier of consumers that will seek out information and then decide to buy. Near the end of the buying line stands the vast mass of consumers who will decide to buy or not depending on what they’ve heard; what they’ve read; their own experience with friends who bought; and their own feeling, developed over time, about whether they have to have it or not. It’s this last big group of consumers that ultimately determines how successful a product is in the longer run.
Looking at the re-opening economy so far what we can see is the behavior of an early adopter group. They’re headed to bars and restaurants, to beaches, to church services, based on a range of factors that includes political ideology, age (and the conviction I’ve heard from some that the odds of getting the virus are really low because they are young), fatigue with the local version of lock down, etc.
It’s pretty clear that this group of early adopters doesn’t represent everyone in the population–although we don’t know how big or little this group might be. It doesn’t take a huge percentage of the bar-going cohort in New York City, for example, to produce jammed streets outside popular bars.
What the technology early adopter model tells us is the the next stage in re-opening the economy will come from “reviews” of that early adopter experience. Was Disney World fun with the new rules or not? Was going out to a beach restaurant scary?
And possibly most important of all, at this stage, do you know anyone who got infected? The evidence suggests that more than any official public health data and even more than political conviction, the key factor n determining how you react to the re-opening is whether or not you know anyone who got sick (and maybe had to be hospitalized.) Consider that the ultimate “user” review.
What we don’t know right now about the re-opening economy is how many people will read those “reviews” and decide to eat out, fly, visit a resort, book a hotel room. And what “reviews” they might need to see to decide to adopt a new consumer behavior. What, for example, do you need to see in terms of reviews to decide to fly?
At the moment, we’re in the middle of a war of reviews where the state of opinion is exceedingly mixed. Politicians like Governor Glen Abbott of Texas and Vice-President Mike Pence are saying Go out because everything’s fine. Other governors and public health officials are saying “Hey, it’s not all that safe out there. And we really need you to continue to damp the curve.”
It’s good to dig deep into the data to see what the numbers might really mean–“reality” does ultimately count and if people get sick at some point, in reality, they overwhelm hospitals–but I think it’s important to realize that behavior at this point in the re-opening economy depends on what the next wave of consumers decide on the basis of reviews from those early adopters.
Here’s what some of those Jacksonville Beach friends who got sick told Cuomo Prime Time on CNN: The pub was packed with other celebrants who weren’t wearing masks, Erika Crisp told CNN’s Chris Cuomo on “Cuomo Prime Time” on Tuesday. “At the time, it was more out of sight, out of mind. We hadn’t known anybody who had it personally. Governor, mayor, everybody says it’s fine,” she said , adding that her friends showed symptoms within days of the outing. “It was a mistake. I feel foolish. It’s too soon.” Another friend, Kat Layton, who lost her sense of smell, said she knew she and her friends “were pushing it” by being out that night. She warned viewers that the current state of the pandemic is not ready for such gatherings and that the coronavirus is still very much present.
It’s important to realize that those are just two reviews from early adopters and that they are be no means determinant.
But I think that the next stage in the re-opening economy will be set by reviewers like those. Very few of us (and lots of reporters and Wall Street analysts are) are spending our days wallowing in the ins and outs of Florida’s screwy coronavirus reporting system, for example. But we do hear reviewers like those and the closer they are to us personally the more power they will have.
All of which doesn’t make it exactly easy to tell which way the re-opening is going and how fast. We’re trying to figure out not what the data says but what the reaction to that data as consumed by individuals might be. But it at least tells us what to look at.