Mar 12, 2020 - Economy & Business

Coronavirus upends macro economy

Gif of the bear market rocking a bar graph
Illustration: Sarah Grillo/Axios

Three major long-term trends have just been thrown violently into reverse: The rise of cities, the rise of global just-in-time supply chains and the rise of the sharing economy. Conditions in all three cases are almost certainly going to get significantly worse before they get better.

The big picture: Cities are victims of the virus, but they're also a key vector for its spread. By their nature, they involve hundreds of thousands of humans living and working in close proximity to one another and relying on myriad shared services. Without cities the coronavirus would find it much harder to spread.

  • The sharing economy is built on a simple and powerful premise: that items from scooters to cars to homes can be put to most effective use if they're shared among multiple individuals. But sharing, now, is exactly what the world is trying to minimize.
  • Global supply chains are similarly being hurt by the virus. They're often based on the hyper-efficient movement of parts and components among dozens of different countries, in a complex dance in which a single missing piece can mean no end product at all.

The bottom line: All three trends maximize the efficiency of an economic system. The downside of that is becoming clear: Fragility and efficiency are two sides of the same coin. The more efficient a system is, the more easily it can break.

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