By Evan Peterson, CME Group
AT A GLANCE
Econ Essentials, a program created in partnership with Futures Fundamentals and Discovery Education, is designed to help high school students learn about core economic principles. Aiming to connect these concepts to current events, a new resource for teachers and students addresses the challenges of sudden supply and demand shocks and what weve learned from the past year.
When airlines were forced to restrict international flights in 2020 as a result of the COVID-19 pandemic, it began a shakeup of the industry. Major carriers could no longer offer as many flights and demand for the flights they did offer dried up. In the third quarter of 2020, the average U.S. domestic airfare declined to $245, the lowest level seen since at least 1995 in inflation-adjusted terms. Despite the lower prices, demand remained severely depressed, resulting in nearly empty planes. As the U.S. and other economies slowly emerge out of pandemic-related restrictions, we can still see the lingering effects of the swift change in supply and demand for many goods and services.
Anew learning tool created by Discovery Education in partnership with Futures Fundamentalsuses examples from the current environment to provide students a useful example of what happens when supply and demand changes suddenly and drastically. This resource is available for high school-level classrooms, and it comes at a moment of economic change we are not likely to see again for some time.
Airlines illustrate the sudden supply-demand shocks of the COVID-19 era as much as any industry, but they were by no means the only ones affected.Meat,lumber,industrial metalsandinternational shippingare all industries greatly affected by COVID that weve covered on OpenMarkets. At the onset of the pandemic,CME Group Chief Economist Blu Putnam took questionsfrom students about his thoughts on how COVID-19 was upending industries and our daily routines. We checked in with him again to discuss the supply and demand dynamics of the past year, and what we can learn from the situation. Following is our conversation.
Blu Putnam:The pandemic accelerated a trend toward more flexible work arrangements for office staff. This has allowed people think about living outside city centers, moving to the suburbs or even more rural areas. This people movement has led to a boom in housing prices outside city centers.
Businesses also learned during the pandemic that virtual meetings could replace many in-person meetings. So, post pandemic, many companies are moving to a hybrid model of virtual meetings with fewer in-person meetings, and that means business travel will not return to pre-pandemic levels.
The education sector was heavily impacted by the pandemic shutdowns, with large job losses. In a post-pandemic world, many educational institutions will not return to the old model. Even as students return to classrooms, some learning will remain virtual, and not all the former workers will be rehired.
Blu Putnam:Pent-up demand is most commonly used to refer to the services that people consumed before the pandemic and then were denied during the shutdowns. As the economy reopens, there is pent-up demand for going out to eat, to travel, to go to concerts or sports events, etc. During the pandemic shutdown, consumers shifted spending away from certain services and increased on others such as household goods, home improvements, etc. Spending on formerly denied services is expected to boom in the rebound from the pandemic.
Gasoline prices at the pump are another interesting example. When the shutdown hit in March-April 2020, airlines stopped flying, and people did not drive as much. Gas prices dropped. Now that travel is coming back, both on the road and in the air, gasoline prices have moved considerably higher.
Blu Putnam:The pandemic shutdown was abrupt. There was a certain amount of hoarding and panic buying of essential commodities. That phase ended after several months as supply adjusted.The rebound from the pandemic is not abrupt like the start was. The rebound progresses only at the pace of the economy reopening, related to vaccine distribution and declines in Covid-19 cases. That is, the transition to a post-pandemic world is a much smoother process than the abrupt nature of the pandemics arrival.
Blu Putnam:The best examples of how to analyze abrupt events are actually found in physics in the study of phase transitions. Think about water when it is heated and goes from a liquid to a gas. All the turbulence is at the boundary or the surface of the water as it comes to a boil. The most severe economic turbulence was in the first few months of the virus arrival.
The fast-spreading virus created a type of cascading system failure resulting in part of the economy being shut down immediately a traumatic shock. Recovery from a traumatic shock is a slow process, and one is changed by the experience. That is,the economy does not revert back to its pre-pandemic state, but finds a new dynamic based on the lessons learned.
Blu Putnam:When the shutdown hit, technology allowed for a rapid shift to a higher percentage of online shopping relative to visiting brick and mortar stores. The online shopping pattern was already gaining traction before the pandemic, and COVID-19 accelerated the trend.
Education was an industry that struggled to adapt to the pandemic shutdown. Online learning or distance learning had been slowly gaining some traction, but, all of a sudden, teachers in traditional classrooms had to learn new skills to teach online. Students had to adjust to the spending time in front of a computer instead of being in the classroom. While most office professionals adapted well to virtual meetings and working from home, educational institutions largely struggled to switch to a high-tech delivery system.
Read more articles like this at OpenMarkets
Visit link:
After Sudden Supply and Demand Shocks, What Does A Recovery Look Like? - Institutional Investor
- QazInnovations: Kazakhstan seeks to bring volume of innovative ... - inform.kz/en - April 23rd, 2023 [April 23rd, 2023]
- World Earth Day: What is green finance, and why do we need it so much? - The Economic Times - April 23rd, 2023 [April 23rd, 2023]
- Netarts Bay cleanup scheduled for Earth Day with SOLVE and ... - Tillamook Headlight-Herald - April 23rd, 2023 [April 23rd, 2023]
- Shaping humanitarian and ethical governance in Pakistan - The Express Tribune - April 23rd, 2023 [April 23rd, 2023]
- Remarks by Secretary of the Treasury Janet L. Yellen on the U.S. ... - Treasury - April 23rd, 2023 [April 23rd, 2023]
- Investing in nature: Building local economies through conservation - McKinsey - April 23rd, 2023 [April 23rd, 2023]
- Lalith's economic vision for Lanka: Export or perish - The Sunday Times Sri Lanka - April 23rd, 2023 [April 23rd, 2023]
- Alliance for an Energy Efficient Economy to help A.P. govt. implement energy-efficiency projects - The Hindu - April 23rd, 2023 [April 23rd, 2023]
- President Biden Announces Key Appointments to Boards and ... - The White House - April 23rd, 2023 [April 23rd, 2023]
- A Restraint Approach to U.S.China Relations: Reversing the Slide ... - Quincy Institute for Responsible Statecraft - April 23rd, 2023 [April 23rd, 2023]
- Carrollton Mayor and City Council Election Preview 2023: Meet your ... - Star Local Media - April 23rd, 2023 [April 23rd, 2023]
- Governor Kelly Signs Bipartisan Bill to Expand Teacher Workforce in ... - Kansas Governor - April 23rd, 2023 [April 23rd, 2023]
- Indigenous Peoples Must Have Full Representation, Participation in ... - United Nations - April 23rd, 2023 [April 23rd, 2023]
- The EPA Region 6 Announces a Total of $23 Million to ... - U.S. EPA.gov - April 23rd, 2023 [April 23rd, 2023]
- Kansas governor strikes funding for anti-abortion pregnancy centers ... - Kansas Reflector - April 23rd, 2023 [April 23rd, 2023]
- Can You Fight for Climate Justice Without Being Antiwar? - Common Dreams - April 23rd, 2023 [April 23rd, 2023]
- Sustainable Tourism: A World leading to the road of Environment consciousness - Nomad Lawyer - NomadLawyer - April 23rd, 2023 [April 23rd, 2023]
- Atlanta's Cop City and the Struggle for Climate Justice - Resilience - April 23rd, 2023 [April 23rd, 2023]
- Jaishankars visit to Uganda, Mozambique went almost unnoticed but it indicated Indias bold gambit in Africa - Firstpost - April 23rd, 2023 [April 23rd, 2023]
- Natural resource - Wikipedia - October 30th, 2022 [October 30th, 2022]
- Non-renewable resource - Wikipedia - October 30th, 2022 [October 30th, 2022]
- Minister Wilkinson Launches Phase 2 of the Regional Energy and Resource Tables - Canada NewsWire - October 13th, 2022 [October 13th, 2022]
- Executive Secretary participates in Russian Energy Week to advocate for decarbonization in the UNECE region ahead of COP27 - UNECE - October 13th, 2022 [October 13th, 2022]
- Renault Group: The Future Is NEUTRAL: The circular economy is stepping into a new era! - Yahoo Finance - October 13th, 2022 [October 13th, 2022]
- Economy Expected to Contract Further in 2023, as the Fed Appears Resolved to Tame Inflation - PR Newswire - October 13th, 2022 [October 13th, 2022]
- Brazils Runoff Election Will Have Enormous Effects on the Global Climate Crisis - Truthout - October 13th, 2022 [October 13th, 2022]
- Health disparities and health inequalities: applying All Our Health - GOV.UK - October 13th, 2022 [October 13th, 2022]
- Opinion: Biopolitics is the invisible hand shaping mental health - The Connecticut Mirror - October 13th, 2022 [October 13th, 2022]
- Avaaz urges Georgieva and Trudeau to lasso-in commitments from IMF to attend December's vital UN Biodiversity Talks in Montreal - GlobeNewswire - October 13th, 2022 [October 13th, 2022]
- Kochi as a global city? Why not, asks the man behind Ahmedabads mega city story | Manorama English - Onmanorama - October 13th, 2022 [October 13th, 2022]
- Hennessy and Thurgood Marshall College Fund Announce partnership with Group Black and The Bishop Gallery to make "America's Most Influential... - October 13th, 2022 [October 13th, 2022]
- Pollution Prevention Week highlights ways to reduce, reuse and recycle waste - Michigan (.gov) - September 22nd, 2022 [September 22nd, 2022]
- England headed for incineration overcapacity, warns UKWIN - Resource Magazine - September 22nd, 2022 [September 22nd, 2022]
- 3 years of the Principles for Responsible Banking: our vision for change United Nations Environment Finance Initiative - UNEP Finance Initiative - September 22nd, 2022 [September 22nd, 2022]
- Isn't It Time To Challenge The Growth Paradigm? OpEd - Eurasia Review - September 22nd, 2022 [September 22nd, 2022]
- Coalition of Nearly 50 Organizations Launches 'Tear the Paper Ceiling' Campaign to Raise Awareness Around the 70+ Million Workers in the U.S. Skilled... - September 22nd, 2022 [September 22nd, 2022]
- Remote work can actually be more productive: More Hub readers respond to the work-from-home phenomenon - The Hub - September 22nd, 2022 [September 22nd, 2022]
- Mendocino Public Health on record-setting Sept. heat: We can't just treat this as a once-in-15-years occurrence - The Mendocino Voice - September 22nd, 2022 [September 22nd, 2022]
- Carbon Ridge Secures $6 Million Investment from Leading Climate Investors and Maritime Industry Leaders - Business Wire - September 22nd, 2022 [September 22nd, 2022]
- Regenerative Travel Is the Next Phase of Responsible Tourism - Outside Online - Outside - September 22nd, 2022 [September 22nd, 2022]
- NNPC: Between rebranding and reforms, By Tijah Bolton-Akpan - Premium Times - September 22nd, 2022 [September 22nd, 2022]
- Embodying the spirit of Malaysia - The Edge Markets MY - September 22nd, 2022 [September 22nd, 2022]
- Nonprofit executive takes on state-appointed economic development role - MiBiz: West Michigan Business News - August 29th, 2022 [August 29th, 2022]
- Noble Mineral Exploration Signs Exploration Agreement with the Constance Lake First Nation - Junior Mining Network - August 29th, 2022 [August 29th, 2022]
- China and the Democratic Republic of the Congo: A Progressively Deepening Bilateral Partnership - The Geopolitics - August 29th, 2022 [August 29th, 2022]
- Oil money is flooding into Guyana. Who will benefit? - Reuters - August 29th, 2022 [August 29th, 2022]
- Remote-work revolution exposes need for better data, tracking tools to evaluate workforce, pay and economy - The Spokesman Review - August 29th, 2022 [August 29th, 2022]
- We need rare earth elements for a greener future, but there's a catch - CBC.ca - August 29th, 2022 [August 29th, 2022]
- BRNHA the steward of the living traditions of WNC: Opinion - Citizen Times - August 29th, 2022 [August 29th, 2022]
- The Fiji Times Back in history: Future of forestry sector - Fiji Times - August 29th, 2022 [August 29th, 2022]
- Hochul announces grand opening of Capital Region BOCES Career and Technical Education Center - Troy Record - August 29th, 2022 [August 29th, 2022]
- Predicting the Future of Greenhouse Gas Emissions - Columbia University - August 15th, 2022 [August 15th, 2022]
- JD.com Ranks 46th on 2022 Fortune Global 500 - Yahoo Finance - August 15th, 2022 [August 15th, 2022]
- Minister Wilkinson Releases New Report Showing the Impacts of Climate Change and Necessity of Climate Adaptation in Ontario - Canada NewsWire - August 15th, 2022 [August 15th, 2022]
- Do Armenians have a future as an independent nation? Part 4 - Armenian Weekly - August 15th, 2022 [August 15th, 2022]
- Getting the diagnostics right 2 - BusinessWorld Online - August 15th, 2022 [August 15th, 2022]
- GrammaTech and T.E.N. Announce Call for Nominations for Product Security Executive of the Year Awards - Business Wire - August 15th, 2022 [August 15th, 2022]
- Energy Vault and Jupiter Power Announce Agreement for Battery Energy Storage Projects in Texas and California Totaling 220 MWh - Business Wire - August 15th, 2022 [August 15th, 2022]
- The North East LEP: Thinking bigger and planning together for the future - Bdaily - August 15th, 2022 [August 15th, 2022]
- It's not enough to buy American. You also need to sell American all around the world. - The Ripon Society - July 27th, 2022 [July 27th, 2022]
- Bid to designate 50k acres in UP as wilderness highlights tension over public lands - MLive.com - July 27th, 2022 [July 27th, 2022]
- A 'Living Wall' At Texas A&M Could Be The Key To Smarter Cities - Texas A&M University Today - July 27th, 2022 [July 27th, 2022]
- Architects and designers must embrace the circular economy - Project Scotland - July 27th, 2022 [July 27th, 2022]
- Strategic Minerals increases Tin and Tantalum production in June and Q2 2022 at its Penouta Mine - Yahoo Finance - July 27th, 2022 [July 27th, 2022]
- Issues of the Environment: Improving recycling rates and quality of recycling materials in Washtenaw County - WEMU - July 27th, 2022 [July 27th, 2022]
- Joe Oliver: The Liberal Cabinet Needs an Intervention - The Epoch Times - July 27th, 2022 [July 27th, 2022]
- SDG&E and Cajon Valley Union School District Flip the Switch on Region's First Vehicle-to-Grid Project Featuring Local Electric School Buses Capable... - July 27th, 2022 [July 27th, 2022]
- Reimagining business: The greatest debt of all time - Newsroom - July 13th, 2022 [July 13th, 2022]
- Moody's affirms A1 rating of Newfoundland and Labrador, changes outlook to stable - Moody's - July 13th, 2022 [July 13th, 2022]
- New Mexico's oil and gas revenues are breaking records and complicating budgets - New Mexico Political Report - July 13th, 2022 [July 13th, 2022]
- FACT SHEET: White House Announces over $40 Billion in American Rescue Plan Investments in Our Workforce With More Coming - The White House - July 13th, 2022 [July 13th, 2022]
- The Class of 2022 Is Ready to Workon Their Terms - SHRM - July 13th, 2022 [July 13th, 2022]
- Faraday Copper Announces Updated Mineral Resource Estimate for the Copper Creek Project in Arizona; Measured and Indicated Mineral Resources Exceed... - July 13th, 2022 [July 13th, 2022]
- Inside the Triangle's latest job opening data: What boards are showing and who's hiring - WRAL TechWire - July 13th, 2022 [July 13th, 2022]
- Reserve Bank keeps blinkers on inflation, raising OCR to 2.5% - Stuff - July 13th, 2022 [July 13th, 2022]
- Abe's drive to bring back Japan | The Interpreter - The Interpreter - July 13th, 2022 [July 13th, 2022]
- UCF Hospitality Researchers Expertise Is Tapped for Global Sustainable Tourism Report - UCF - June 30th, 2022 [June 30th, 2022]
- Feminist Economics and the Fight for Human Rights - OHCHR - June 30th, 2022 [June 30th, 2022]
- Biden Administration announces historic coastal and climate resilience funding - National Oceanic and Atmospheric Administration - June 30th, 2022 [June 30th, 2022]
- Why green ammonia will be the workhorse of EU's future hydrogen economy - EURACTIV - June 30th, 2022 [June 30th, 2022]