Trendspotting: Products That Thrive in a Pandemic

NEWSWIRE: 3/30/20

• The “coronavirus economy” is here: Groceries, guns, and teleworking software are flying off the shelves, while dining, leisure, and travel have tanked. Americans’ spending patterns are being upended as demand takes a hard turn toward the industries and brands best suited for social distancing. (The Wall Street Journal)
• NH: Brace yourself. Coronavirus has taken hold of the economy, and we’re in for a wild ride. Many of the changes in consumer spending are visible in everyday life: Empty airports, closed theaters, and shuttered restaurants are reflected in sharp declines in spending on flights, hotels, eating out, and leisure activities. In areas under lockdown, these industries have basically screeched to a halt. By March 19, dining visits tracked by the reservation app OpenTable had plunged by 98%. The restaurants that haven’t suffered as much are those that were already designed for delivery and pickup, like pizzerias.
• Where are consumers going instead? They’re flocking to the grocery store to stock up on staple foods and toilet paper, or going online to order them. Sales at grocery stores and online grocers are up an impressive 41% and 86%, respectively, compared to the same time last year. The stores that have benefited the most are big brick-and-mortar outlets like Target, Walmart, and Costco, which are the best positioned to survive in terms of resources. Though Amazon has also seen a surge of orders, their switch to prioritizing essential items only is encouraging customers to order elsewhere. The equity prices of these companies are on par with or only slightly lower than what they were in February. Also surging are sales of two different forms of reassurance for these uncertain times: guns and cannabis.
• Meanwhile, the shift to working from home and distance learning has been a boon for teleworking software. Workers who will now be teleconferencing for the foreseeable future seem to be embracing the “WFH mullet”: At Walmart, sales of work shirts have soared--but not pants. So have sales of surveillance software to bosses worried their employees aren’t actually working.
• Our tastes in entertainment are also shifting in a big way. Goodbye to movie theaters, concerts, sporting events, and museums. Hello to online videos (particularly on YouTube), coloring books, and drive-in theaters. Fewer commutes mean fewer opportunities to listen to podcasts--and when it comes to topics, the true crime category has seen a 30% drop in listeners since early March. People are increasingly turning to escapist entertainment and the news (both online and on TV) to feel comforted and informed. Demand for children’s content and feel-good, nostalgic content is higher than that for dramas or new series being released--which is great news for Disney+.
• And when we’ve run out of videos to watch online, there’s always good old-fashioned family fun. Last week, the top 10 bestselling items on Amazon were all cleaning supplies or personal hygiene items with one exception: #7, “puzzles for adults.” At Ravensburger North America, whose parent company is the world’s biggest jigsaw-puzzle maker, sales of puzzles over the past two weeks have skyrocketed 370% YoY.

• With traditional sports sidelined, esports and streamers are stepping in to fill the void. The gaming community is treating this moment as an opportunity to win over new fans who typically would be harder to reach, from casual players to school-aged kids. (The Washington Post)
• NH: The Masters, NCAA championships, NHL, NBA, MLS, and MLB have all either suspended play or canceled their events. ESPN’s only saving grace was the news that Tom Brady is leaving the Patriots. But they can only talk about the GOAT for so long before viewers again start to long for live competition. That’s where video games come in.
• People are flocking to esports. Gen-G, an esports streaming company, saw an 18.2% increase in Chinese viewership over the last two months. Steam, an online gaming platform, had a record number of users on March 15. The audience for Counter-Strike: Global Offensive’s pro-league has grown by 27% since competitions started in mid-March. And Twitch downloads have increased by 41% in Italy.
• These increases are because esports is particularly adaptable for stay at home life; players can still compete from home-computers and stream games on YouTube or Twitch. One of the reasons we believe that esports is particularly well suited for Millennials is that it allows for socializing between fans. Live message boards and polls let fans interact remotely from all over the world. In a time when people are starved for live competition and human interaction, esports is well suited to fill both of these voids.

• The sweeping government actions taken in response to COVID-19 have some young people hoping they will “normalize large-scale state intervention.” In short order, policies that were once considered radical or outlandish have become a reality across Europe and the United States. (The New York Times)
• NH: The response to COVID-19 has unlocked unprecedented levels of government intervention and control over economic activity.  France announced that no business of any size will face bankruptcy. Germany unveiled a “bazooka” in the form of unlimited cash to all struggling companies. Japan is on the verge of approving the country’s largest stimulus package in history. And here at home, Andrew Yang’s dream of a UBI is basically coming true: Millions of Americans will soon begin receiving stimulus checks. Meanwhile, the Fed is standing by ready to do practically anything, which includes lending money to businesses directly for the first time.
• The massive economic intervention, combined with sweeping control over public movement, has thrust us into uncharted territory. We’re being forced to rethink basic institutional assumptions--like Americans’ dislike of big government at a time when quick choices by political leaders are redistributing income and wealth on a vast scale. Only time will tell whether any of this thinking will carry over to post-crisis policymaking--as well as whether it will result in greater generational solidarity or division.
• My “turnings” perspective argues for the former. We’re in a Fourth Turning (crisis), and during crisis eras, government--representing deputized agents of the national community--always becomes much more powerful. Also, during these eras, generations tend to come together in order to ensure their collective survival. We can already see this in young people’s willingness to adopt protective measures despite their comparatively lower risk; in surveys, the young are no less likely than their elders to say they’re taking the warnings seriously. (See “Trendspotting 3/23/20, Keyword: Generations.”) If what comes out of the outbreak is more public unity, I can see us headed for a First Turning "regeneracy" in which generations continue to cooperate for the common good.
• According to columnist Mary Schmich, COVID-19 has been a wake-up call forcing Boomers like her to confront their mortality. It’s the first time, she writes, that she’s thought that “60 may not be the new 40 after all.” (Chicago Tribune)

• NH:  Schmich raises several interesting questions, all of which are confusingly jumbled together in her oped.
• One question is how people respond personally to the prospect of their own death. In most premodern societies, where there is a significant risk of dying at any age, culture and religion remind people regularly of the need to prepare for death. (As in the Christian memento mori: literally, "remember, you must die.) In modern societies, where nearly all the dying is done by the elderly, social awareness of death tends to be suppressed. So the elderly are more likely to confront this reality on their own, unsupported by society at large. (It has been said that a culture can either obsess about death and censor sex, or the other way around. The early Puritans and Victorians chose the obsess-about-death option; we moderns clearly prefer the other way around.)
• As for Schmich's concern that the C19 pandemic seems to put the elderly at much greater risk than younger age groups, yes, that's true. But it turns out that the much worse survival of the old versus the young is a unique feature of this virus. Most epidemics triggered by new pathogens are unusually deadly among both the very old and the very young--the old because their bodies are frailer and the young because they have not yet built up immunity to anything similar. The "second wave" of the 1918 Spanish Flu pandemic was especially deadly among young adults. Following the initial bubonic plague circa 1350, Europe experienced successive "child epidemics" every twenty years or so that were especially deadly to the generation that had been born after the previous wave.
• Indeed, if it makes Schmich feel better, it may be that the superior acquired immunity of the old to coronaviruses in general (lots of contact with common colds like OC43 and HKU1) renders the old uniquely vulnerable. Why? Due to something called antibody-dependent enhancement (ADE). When this happens, your body's reaction to a new virus could be worse if you possess antibody-memory to a similar but different virus. Rather than neutralize the virus, your antibodies just make it easier for the virus to invade your cells. ADE (it has been hypothesized) may explain why children so rarely get very ill from SARS-CoV-2 and why the older residents near Wuhan, who presumably have had long contact with coronaviruses, suffered such a high death rate. It also explains why any vaccine must be carefully tested before it is given to the population at large.
• Another question--prompted by the #boomerremover hashtag--is generational. There comes a time in the lifecycle of every generation when its members suddenly become aware that they constitute the old guard--and that their particular political and social habits will likely be washed away by the exigencies of history. As the national community mobilizes and as wealth and incomes are reshuffled, Boomers may not feel as energized by the possibilities as coming-of-age Millennials. Crises create before-and-after thresholds like this. They are fundamental to the process of generational formation itself.
• Finally, Schmich complains about people who think there's a trade-off between lives and money. That's idiotic. We make such trade-offs all the time. If we didn't, we would have a 10 mph speed limit for trucks and not give bonuses to powerline installers. Ditto for her claim that, when healthcare resources are limited, the young should not have priority over the old. What would she prefer... rolling a die? Utilitarian considerations such as remaining years of life are not just favored by pointy-headed economists. Focus groups suggest that they are also favored as common sense by ordinary people.

• As of March 22, President Trump’s approval rating has jumped to 49%—the  highest of his presidency. Historically, presidential job approval has climbed when the nation is in crisis, though double-digit surges appear to be a thing of the past. (Gallup)
• NH: After Pearl Harbor, FDR’s approval rating rose by 12%. JFK’s popularity rose by 13% after the Cuban Missile Crisis. And GW Bush’s approval rating increased by 35% following 9/11. But has Trump’s approval rating had a similar crisis-situation bump? Yes, but not as much as his predecessors.
• On March 14, Trump's approval rating was 44%. As of March 22, it had risen to 49%, the highest of his presidency. But unlike FDR, JFK, and GW Bush, Trump’s increase seems modest. PredictIt bettors are similarly cautious about how the virus will affect the November elections. On March 26, the odds of a Republican beating a Democrat in the presidential race finally went in Trump's favor, but just marginally. And as of March 30, the Democrats are now, again, predicted to win in the betting market. His increase in approval ratings is seen as temporary. See chart below.
• The “great” leader presidents of the past saw their popularity rise in times of crisis because they promised to pull the country together. But with Trump bickering with reporters and fuming over Nancy Pelosi, he will be hard-pressed to acquire the gravitas needed to transcend partisan divisions. The irascible and choleric style that won him the last election may be the last thing Americans want right now. See “Trendspotting 3/23/20, Keyword: Bipartisanship.”

• According to MBLM’s latest Brand Intimacy Survey, there’s one brand Millennials, Gen X, and Boomers all feel emotionally connected to: Amazon. The e-commerce giant was the only brand to make the top five for all three generations; younger consumers favored more media brands, and older consumers retail brands and CPGs. (MarketWatch)
• NH: MBLM asked consumers what brands they felt most “emotionally connected” to. What are your generation’s favorite companies? Millennials: PlayStation, Amazon, Target, and Disney. Gen X: Apple, Amazon, Netflix, and Jeep. Boomers: Amazon, Toyota, Apple, and Costco.
• Amazon was the only company on each generation’s top five list. But if you look by generational archetype, Amazon's brand image has both attractive and troubling elements for each generation. At first glance it's surprising that it shows up on everyone's list. For Millennials, Amazon is the familiar big-tech company they grew-up with. They are comforted knowing that their packages will always arrive in two days. But on the other hand, Millennials see Jeff Bezos as a caricature of an egotistical, union-busting tycoon. For Gen Xers, Amazon offers them the convenience of not leaving the house nor interacting with the public. But it also goes against their love of niche brands by being a company for "everybody." For Boomers, it’s a successful company run by a CEO with a true "American Dream" story. But it also represents the threat of big-tech companies collecting their data and threatening privacy. 
• But IMO Amazon doesn't have to care much about any of the negative vibes. This firm has completely consumed our daily lives. No generation can imagine Christmas or birthday shopping without the online giant. And now that they own Whole Foods, you can get your groceries delivered for free (a particularly good service at the moment). So, whether there might be some broader issue with one's personal beliefs, they ignore the issues and embrace Amazon for its all-encompassing convenience.

• According to a recent report, 90% of U.S. tech job growth over the past 15 years was generated in just five cities. Even though other metro areas have also gained tech jobs over this period, the total share of the nation’s tech employment captured by the top cities has only grown with time. (Brookings Institution)
• NH: Last December, Robert D. Atkinson, Mark Muro, and Jacob Whiton authored a major report for the Brookings Institution called "The Case for Growth Centers: How to spread tech innovation across America" (see summary here). The authors claim that America's high-tech job growth is concentrated in a small number of urban centers and that, over time, this concentration has been growing, not falling. They also doubt that the growing concentration will be reversed by market forces and advocate federal policies to help high-tech industries develop in a more geographically "balanced" fashion.
• The authors start out by identifying jobs in 13 "innovation industries" which they define as industries with extraordinary R&D and STEM input. Let me quote the authors: "As a group, these 13 industries"—which include aerospace, software, chemicals, computer equipment manufacturing, telecom, and data and R&D services— "inordinately contribute to U.S. prosperity. While innovation industries account for just 3% of the nation’s jobs, they generate 6% of the nation’s GDP, a quarter of its exports, and two-thirds of business R&D expenditures."
• Nearly a quarter of these jobs are concentrated in 5 cities: Boston, Seattle, San Francisco, San Jose, and San Diego. And the share of all innovation jobs located there has been rising over the last 15 years, from 17.6% to 22.8%. Meanwhile, the vast majority of America's 100 largest metro areas have seen zero or negative innovation job growth. See the first two charts below on the trend in the top 5% of all innovation hubs (about 20 cities: the five mentioned above plus the likes of Austin, Denver, Raleigh-Durham, New York, and Los Angeles): The most innovative cities continue to add the most innovation jobs. Consequently, the top 5% have a unique value-added profile. See the third chart.
• Some readers wondered whether the Brookings team may have biased the results by omitting, among their innovation industries, digital services (like computer systems design) which may be more spread out geographically. To answer this question, the team wrote a follow-up study for AEI. And this essay is a summary of that response. The team points out that, actually, digital services have experienced the same "concentration toward the top" as the other innovation industries. San Francisco and San Jose (plus Austin) accounts for the most gain in digital services job share since 2010. See charts four and five below.
• We have already discussed the curious anomaly in interstate U.S. migration since the 1980s. Through most of American history, high-income states tended to grow faster in population, decade over decade, than low-income states as low-wage workers migrated to high-wage states. Consequently, regional wage growth tended to revert back to the mean growth rate for all regions. That has no longer been happening over the last three decades, giving rise to growing regional inequality. (See "Trendspotting 12/9/19, Keyword: Mobility.")
• One obvious contributor to divergent income trends between states, of course, could be divergent trends in the cities within these states. That indeed seems to be happening. (See "Trendspotting 1/21/20, Keyword: Metro.") Cities of all sizes were once about equal in terms of average earnings and earnings inequality. Today, the largest metros increasingly have higher average earnings than smaller metros--and they have achieved that gain almost entirely through higher wages at the top, so much so that low-wage workers can no longer afford to live there. The Brookings team may be identifying another aspect of the same trend. A cursory glance shows that the largest, most affluent, and most unequal metros overlap heavily with the list of superstar innovation hubs.

• 60 Minutes recently profiled Hungary’s Family Protection Action Plan, the country’s ambitious program to raise the birth rate. The segment is critical of the efforts to “keep Hungary Hungarian,” which in the fine print exclude huge categories of people like the unmarried, gay, divorced, or jobless. (CBS News)
• NH: The right-wing populist regimes of eastern Europe--led by Russia, Poland, and Hungary--have chosen a distinctive strategy to reverse their demographic decline. The strategy might be summarized as "procreation, not immigration." But there's more to it than that. Hungary's new and generous pro-natal subsidies are tied to a conservative (and Christian) worldview that valorizes marriage and stay-at-home moms, disapproves of homosexuality, and (in a coded jab at western cosmopolitans) wants to "keep Hungary Hungarian."
• Victor Orban's style of pronatalism has been lambasted by the western media as both self-defeating and inequitable. It's self-defeating, they say, because it rules out immigration--which is the fastest and easiest way to swell the Hungarian labor force. And it's inequitable because it imposes judgmental rules on the "right sort" of parents (married, employed, and heterosexual) eligible for the program. (See "Trendspotting 9/16/19, Keyword: Hungarian.")
• IMO, these judgments are premature. Yes, it's an unabashedly populist and conservative platform. But we'll have to wait and see whether it works. It's not as if the western Europeans have cracked the policy code on how the raise birthrates.
• Immigration? Yes, Hungary has ruled that out. But immigration is a lot easier to accept for larger and more affluent western European nations that are experiencing little emigration and whose immigrants are coming mainly for eastern Europe. Hungary, by contrast, is a smaller and poorer nation that was already experiencing heavy emigration before Orban arrived--and where potential immigrants are almost entirely Muslim. Hungarians may have decided their society was reaching a tipping point: We either protect our national "brand" or we just abandon the whole project. For better or worse, they chose brand protection.
• As for judgmental, well, it's all in the eye of the beholder. True, family policies in France or Sweden offer equal benefits to heteros or gays, the married or unmarried. But then again, you almost always need to be employed to enjoy all the paid leave, childcare, tax, and subsidy perqs. That could be interpreted as a judgment against nonworking spouses.
• So again, if most Hungarians support the new Family Protection Action Plan, let's wait to see if it works. I suspect that most of its western detractors will be more upset if it succeeds in raising the birthrate than if it doesn't.

• A recent EY report examines the attitudes and beliefs of 12- to 22-year-olds, a group that includes both late-wave Millennials and Homelanders. The most common personality type in this group is what the report labels a “Stressed Striver”: high achievers who have big dreams, but who worry they’re not good enough. (EY)
• NH: Take a look at the data in this report; it’s multifaceted and interesting. Just don’t read the conclusions. The report is titled “Gen Z: A generation of contradictions,” which refers to the authors’ belief that  “Gen Z” (ages 12 to 22) is incredibly different from the Millennials who came before them. But the age group they’re referring to is largely made up of…late-wave Millennials. And the traits they claim to be different are only different if you believe in a very basic Millennial stereotype: that of an avocado toast-gobbling socialist who lives in the moment and broadcasts their every move on social media.
• Rather than offering a contrast, what’s evident from the data is the continuity of generational traits. Late-wave Millennials are ambitious, cautious, stressed, want to work in jobs that align with their values, and are focused on the future. These things are true about early-wave Millennials, too. Among late-wavers, some traits and beliefs have intensified: They’re increasingly interested in environmental issues, and they’re more afraid that they won’t be able to find jobs they enjoy that also allow them to support themselves. But their core values remain the same.

DID YOU KNOW?

All the Art That’s Fit to Scroll. Are you homebound and already tired of Netflix? There’s another option for people seeking to fill their leisure time: browsing virtual art museums. After closing their doors to the public, some of the world’s most famous galleries launched online tours that replicate the experience for would-be visitors, fast-tracking a physical-to-digital transition that has been in the works for years. The Rijksmuseum in Amsterdam, for instance, created Masterpieces Up Close: a 360-degree museum walkthrough complete with a multimedia guide. In some ways, the website is even better than an in-person visit: Viewers can get much closer to the artwork than they normally would without paying for a ticket. Yet moving the art world online is also presenting some challenges. The sales at this month’s Art Basel Hong Kong, which was run entirely online for the first time ever, suggest that simple, two-dimensional works are well-suited to remote viewing—but sculptures and conceptual art are not.