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John Flavin

The Local Economy Under COVID 19: a back of the envelope analysis

A back of the envelope analysis

By John Flavin

Consultants have proposed to prepare economic analyses for local cities for hundreds of thousands of dollars using sophisticated computer projections. My back of the envelope analysis is free and may be just as valuable.

When I first started working in real estate development, the industry was just developing fifteen year cash flow computer models to prove the value of a project. My boss at the time rejected this new-fangled voodoo and told me “if you can’t make sense of a deal on the back of an envelope, don’t do the deal”.

In that vein, here is my back of the envelope analysis of the primary components of the local economy under COVID-19:

As I said at the beginning, my analysis is free. I tested my conclusions by walking through quiet spots normally full of tourists, checking out relatively empty hotel parking lots, surveying formerly successful retail areas with permanently closed shops, and seeing office buildings with large and obvious vacancies. The only active areas were the industrial ones and, if my analysis holds water, they will remain the only active ones for the foreseeable future even after a COVID 19 vaccine is made available.

Unlike many sophisticated and “magical” analyses, you can test my conclusions for yourself pretty easily.

I encourage you to do so.

Tags

Economy, COVID 19, industrial, tourism, hotel, retail, office, senior living