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The Night the Lights Went Off
I was sitting in my hotel room in Hawaii on Wednesday, March 12, 2020 getting ready to view the Jazz-Thunder NBA game when, to my astonishment, the announcer said the game had been postponed because two unidentified players had tested positive for COVID-19. This was the beginning of my so-far two-month odyssey of exile and uncertainty.

We have been in lockdown for eight long weeks, with more to come. Those who know me and my love of travel, understand that this is torture for me. I have resisted the urge to write a Cyber-Graham until I could get some real perspective on the pandemic and its potential after effects. One thing that is crystal clear in my mind is the uncertainty of this disease, its effective treatment, and the ultimate health and economic impact it will have on our country and the world as a whole. The truth is, we simply don’t know how long this will extend. My mindset is not to dwell on the pandemic itself, but to look beyond it. I remain cautiously optimistic that, sooner rather than later, effective treatments and vaccine(s) will be developed to treat and prevent this vicious virus and end the health and economic crisis in which we unfortunately are living.

The Online and Work-At-Home Transformation
The immediate and, I believe, long-term effects of the pandemic will be to vastly accelerate the transformation of our country to a primarily online consumer industry and dramatically increase those persons who choose or are asked to work remotely. This evolution, which was already in the works, will become a revolution. Our habits as consumers, workers, and commuters will change forever.

The collateral effects of this will be two-fold: (1) many retail businesses and restaurants will either downsize, shutter their doors (see J. Crew’s recent bankruptcy, for example), or go virtual; and (2) commercial office buildings will have heavy rental declines as businesses have more of their employees operating from home or remotely. Thus, downtown cities and shopping malls may look very different in the coming years, with empty stores and offices. This will obviously come with a heavy toll on landlords and those that financed such buildings, including banks and investors (indirectly, like us, through various securitized investments).

The Unemployment Crisis
As of last week, the United States had 33 million people unemployed and that number is growing. How quickly we can efficiently and safely get our economy back open is the burning question. There is no doubt that this is a sensitive balancing act, but clearly the longer it takes, the more businesses will fail, limiting the opportunities for the unemployed to return to their former jobs. Elimination of jobs could be one of the most lingering devastations of the pandemic.

The Travel and Hospitality Industry
In the wake of the pandemic, travel is down over 90% and hotel occupancy is similarly down. These industries employ a vast amount of people and significantly contribute to our GNP. How quickly these areas get reopened and the public’s acceptance of travel are critical, unanswered questions. In addition, many cities rely on international travelers and business and trade conferences. When and to what extent these return to “normal” is a complete unknown. It is yet another tenacle of COVID-19.

Our Exploding Debt
Starting with a huge deficit and an unbalanced federal budget, the Congress and Federal Reserve “lent” trillions to businesses and provided stimulus checks to families to help offset the initial economic distress caused by shutting down the economy. At some point, we must pay back our debt on the federal Visa card. That will be hard pill to swallow for our future generations.

The Good News
The good news is that based on the resiliency of our country and the 330 million citizens who make it up, we will somehow find a way to overcome this pandemic and the health and economic pain it will leave behind. However, to do this, we must recognize that the world as we know it and our past practices will change. This pandemic truly is a game changer in every way. I am consciously avoiding any political commentary on the way this crisis has been handled on the federal, state, and local levels. Hopefully there will be plenty of lessons learned from this painful and expensive lesson—both from a human and financial perspective.