I love this time of year.
It’s finally warm in Toronto, and no doubt across most of the country as well. Everything is green and growing; the picture of new, vibrant life. It’s a time of renewal. A time of year when it’s very easy to feel optimistic.
At the same time, people are feeling pretty fed up with the restrictions associated with the pandemic lockdown. We are getting impatient for what’s next, and are eager to resume a life that gets as close to normal as possible.
Unfortunately, that is just not possible. We are entering a period during this pandemic where a new reality is going to impose itself, and that is: it’s a lot easier to shut the lights off than it is to restart them.
Here are some of the ingredients of that second wave I am most concerned about:
The Canada Emergency Wage Subsidy (CEWS) has done the job of keeping many Canadians on payroll that would otherwise have been on unemployment. That’s great, and the fact that it’s been extended through August is also great. But once CEWS is done, many of those who have been kept on payroll as a result of the subsidy will now be off it. Demand across the economy won’t recover in time for business activity to pick up the ball when CEWS stops. That will depress sales activities, both new and used.
Many of the deferrals that banks and suppliers have offered to dealers from the start of the pandemic will come due in the fall. This will create a crunch at a time when businesses can expect to still be under considerable cash pressure.
There are some parts of the economy — large parts — that really don’t have a clear path to re-opening at all. Restaurants employ a lot of people who buy cars and get cars serviced. Those businesses are wrestling with lowering density, installing barriers, and all kinds of other measures, but it’s not clear what portion of their customers will be willing to participate. Airlines, hotels, and other parts of the travel industry are in the same boat — or rather, situation.
Schools are another area that impact large numbers of people and businesses that don’t have a clear path to recovery. Think of all the businesses in a university town that won’t have thousands of undergrads arriving in town, buying pizza and beer, and engaging in all the other consumption they do through the school year.
So where does this leave us?
I see reason to be optimistic about many things. For one, as we get used to social distancing, wearing masks and washing hands, and as all the other behaviours of this pandemic normalize, so too will many people’s willingness to re-engage even though it carries risk. At the same time, there are very troubling questions that are a long way from being answered.
Let’s hope for the best and plan for the worst. Continue to do the things you need to do that will create as much financial flexibility for your business as you can. And come fall, you will be very glad you did.
