The pandemic and the subsequent societal response have created difficult situations. It has also allowed us to observe some economic circumstances that we would have never been able to see were it not for these events. We are getting used to seeing incongruous headlines next to each other. Note below the big headline at noon Eastern Time on 8-17-2020 from the front page of Bloomberg.com, and then notice the second small headline below it underlined in yellow. How can these two items exist on the same news feed? 16% of Federal Housing Administration (FHA) loans are in delinquency, yet homebuilders are the most hopeful they've been this millennium.
In real time we can see the world changing rapidly. Industries that have always been risky, such as food and dining, have shown their true colors. We are seeing many of our favorite places to eat out strain under the weight of reduced traffic. While a strong recovery is underway in some areas, we have not seen a V-shaped recovery for restaurants as a whole here in the United States.
It is also interesting when we get to see actual economic principles in play. In the chart below, it is the substitution effect. While people are not eating and drinking at restaurants like they were before the pandemic, they are finding other ways to imbibe. Note that retail beer, wine, and liquor sales have spiked with the lockdowns. This means that many brewers, vintners, and distillers have in large part escaped the clutches of a downward economic cycle.
The pictures above encapsulate 2020: the economy in a perpetually paradoxical state, with a virus picking the winners and the losers.