One thing that seems pretty clear is the trend towards more concentration in business activity is probably going to continue.
We’ve been seeing for a couple decades that large businesses are taking over a greater and greater share of the activity in a lot of industries. I think that’s just going to accelerate now because it’s much more likely that large businesses are going to weather the economic part of this crisis better than small businesses, even with all the help that’s been passed in the relief bill. So I think that’s going to continue.
The question is whether there’s going to be a wave of entry of new firms on the back side of this, and that’s hard to say. Unfortunately, the long-run trends are not encouraging on that. We’ve been seeing for about the last 40 years a long-run decline in business formation rates. So that would have to turn around if we’re going to see a lot of entry of new businesses after the crisis recedes.
Maybe in terms of specific industries or business models that you might think are going to change, we might see a quicker acceleration. It’s been moving that way, but might accelerate towards delivery-based retail instead of brick-and-mortar, go to the store and shop retail.
I think some specific businesses that have been struggling and will probably continue to struggle more are department stores, movie theaters, I don’t think people are going to be so excited to take a cruise for a while. I think we’re going to see declines in those lines of business.
Whether there are longer-run things for travel and restaurants, hotels, accommodations, that kind of thing, certainly that’s going to be one of the slowest sectors to recover. Whether there’s a long-run decline remains to be seen, but one could imagine how that could happen.
