If you’re tracking the virus and its effects on the economy you want to make sure you are looking past just the state data and going deeper to the counties. In the same way that not all states are created equal not all counties are created equal either. At least not economically.
In fact, 32.3% of GDP comes out of just 31 counties, and the top 20 counties account for 25.12% of GDP. Just seven counties in California account for 9.13% of GDP. Contrast that with my home state of Wyoming which only represents 0.17% of US GDP. If everyone in Wyoming is out and about living their pre-virus lives it would barely register in terms of GDP or in the EPS of most public companies. It is still the best place on earth-seriously-but it is a very small part of GDP.
In the table below I have put in the top 20 counties as a percentage of US GDP so that you can look at them and track them. This will be one of the keys to tracking this specific recovery as the virus will be hitting different areas with different intensity until we get a vaccine, or until we hit herd immunity assuming that it is even possible with this virus.
While we don’t expect another nationwide lock down, we do expect to see more city, county, and possibly some state lock downs as the virus progresses. If we see lock downs in any of the counties in the table above then expect business to suffer. In fact if the case count, hospitalization rate, or death rate go up significantly in any of these areas then you can also expect a slowdown in business. As we have seen over the last few months when people don’t feel safe they do not go out as much. If they don’t go out they don’t spend as much. Yes, you see some of the YOLO crowd but the bulk of the boomers and their parents stay home, and they have the most spending power.
If a couple of the right counties see the rona get out of control the ripple effects could be big.
Happy Trading and Be Safe,
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