25.03.20 06:00 ET
Joe Schleppy was just your average American guy. At age 41, he held a decent job working in a factory which helped him earn about $65,000 per year which was enough for him to survive and enjoy a decent lifestyle.
Then along came the Chinese Virus, aka, coronavirus or nCov-19, now known as COVID19.
Joe didn’t really pay much attention to it in January as it was an overseas problem confined to one China which really didn’t affect his livelihood, or so he thought.
One day Joe decided to go out with the boys after work and have a beer at the local bar. While they were there they heard the local news which the bartender turned up louder for everyone to hear. The news about the coronavirus starting to impact his state caught everyone off guard. Joe decided to pay his tab and leave and on the way home stopped to pick up a case of beer, some canned tuna, and two four packs of toilet paper at the grocery store. Little did Joe know that this late February evening would be a precursor to a nightmare which follows.
The first week of March would prove eventful at work. The boss held a meeting with the floor telling everyone that there would only be enough incoming supplies from their vendor in China for two more weeks. After that, the company might have to look into layoffs. Joe frowned as he was about to set up a closing on a house he was trying to purchase but with fifteen years at the company he thought his job was safe.
Then Joe went to the grocery store one night and noticed all the toilet paper, paper towels, and cleaning supplies were stripped bare. A tinge of panic hit his mind and Joe started to rush from store to store until he walked into a Home Depot and got what he thought he needed to stock up for at least two months.
Then on Friday the 13th, it hit. The owner of the company came down to the floor and all 71 employees were given the bad news; the company was shutting down until further notice due to a drop in orders and a lack of raw materials for manufacturing. The owner gave his team one extra paycheck to cushion the blow and told everyone to immediately apply for unemployment benefits.
Joe’s reaction was swift and sudden. The minute he walked out to his pickup truck, he called the realtor he was dealing with on the home he was buying and cancelled the contract. When Joe got home he called the car financing company to ask if he could skip some payments after March because he was laid off. And then Joe decided not to call the credit card companies because he thought “certainly the government will bail me out like the banks and that’s my only real source of income.”
Joe then drove straight to the local supercenter, and purchased whatever food and dry goods he could because he realized that he could be locked down for several months. When he got home that night, he cancelled his flight to Las Vegas in October, ending his vacation dream. After that Joe tried to contact his 401K administrator to no avail and logged into his account online demanding that all of his stocks be liquidated and his money moved into a bond fund or cash.
Joe’s actions had consequences far beyond Joe’s world.
Joe immediately quit going to the bar which eventually was shut down by the state so the employees there were laid off also. The bar’s employees started acting like Joe as did the owner.
Joe quit going out to eat since he was laid off, contributing to local restaurants laying off their employees.
Joe cancelling his home purchase eventually lead to a glut of cancelled contracts and no one looking to purchase a home causing the realtor to lose her job. Home prices began to collapse and that feedback loop began.
Joe rescheduling his car payments meant the auto finance company would get millions of calls like his, causing them to raise interest rates on new car purchases. It would not matter because there were no “Joe Schleppy” buyers anyways. The auto dealerships began laying off salespeople, office staff, and eventually reducing hours. The car salesmen did not make any commissions so they started to do what Joe was doing. Car inventories grew to an almost 200 day supply in no time flat.
At the same time, Joe and many others quit getting necessary maintenance on their vehicles causing the dealers and mechanic’s shops to start laying off even more people.
Joe cancelling his vacation and the impact of the virus helped contribute to Las Vegas shutting down and tens of thousands of people losing their jobs. They will try to lure him back but Joe is too scared to travel due to his precarious financial situation contributing to the feedback loop in the travel industry.
Joe quit buying things online that were for fun and relaxation so eventually the online stores endured a drop in business and had to start laying off people thus putting more Joe’s on the street.
Joe also quit buying non-necessities locally and only buying gas every two weeks as he cut down his travel thus reducing local sales tax revenues because Joe was not the only one. Financial problems began to impact the local and state governments at a time when they needed money to deal with the coronavirus crisis more than ever.
Joe’s parents also began to ask for financial help as the stock market crash has wiped out over 40% of their retirement accounts. Joe sent what part of his savings plus his tax refund, but at the same time began living off of his credit cards to pay his bills.
Then Joe decided at some point to quit paying his bills because he needed to conserve cash for necessities and to help his parents. No one lifted a finger to collect on Joe’s delinquent accounts because the courts were closed but they shut off his credit cards so now Joe could not pay any bills as the benefits from unemployment were too low. Thus causing Joe to spend even less and drink even more.
As the crisis worsens and Joe’s inability to find sustainable employment continued, prices begin to increase at grocery stores on certain items due to scarcity. Joe quits buying steaks and other more expensive meals thus causing the feedback loop at the grocery stores to begin and impacting ranchers, farmers, and other food manufacturers.
Each action Joe engages in by reducing activity multiplies the feedback loop times a factor of 10 but few realize that the Joe problem is so pervasive. Joe no longer is gambling on the American dream but just trying to survive like these are “normal” times but has had his standard of living reduced by over 60%.
Now multiply Joe Schleppy’s actions and fears times 100,000,000.
Welcome to a deflationary depression America.