> The lines between manufacturing and services are blurring.
If there was on thing I learned with this crises is that services are the first to go down. Why? Because they're expensive and not a must have.
On the other hand real products like food, houses, vehicles, medicine... are the ones that will never go down (must have). But they have low margins and are not so attractive during growth periods.
So while the trends exposed here are probably true, the fundamentals will surely change with such large disruptions as the ones predicted here. And then the service providers will not have who to sell to anymore. Auto-balance
Note: I'm not an economist. I read however "Economy in one lesson"
Really? Car and housing prices have dropped significantly since 2008.
Food prices have dropped steadily for several hundred years (exceptions for misguided policy like the ethanol mandate, which spiked corn prices globally).
I assure you that healthcare, education, and sanitation do much better in a crisis than durable goods. Nobody is going to stop their college education because the rest of the economy collapses (they might even be persuaded to go to grad school), but people put off buying new cars, new computers, or anything else where their current item can last a bit longer.
These 3 are fundamental needs (so exceptional services - more like utilities).
But even here, unless life threatening situations, people will postpone action. (eg. drugs instead of surgery, disinfectant, ...)
With education I beg to differ: although it may look like a safe heaven, pursuing education for the sole purpose of temporary financial stability is probably not that smart. Reasons:
- practical experience is more valuable and if not truly committed to the PhD, don't really see the value
- state funding for schools & research will drop (later, true, but it will).
- if everybody (or the majority) will go to school, who's going to do the work to come out of the crises.
Yes, those services are fundamental needs. There are lots of services that are fundamental needs, and lots of goods that aren't. In fact, a greater percentage of services are fundamental than goods, because your contention that " services are the first to go down" is exactly the opposite of what we observe in practice.
"If there was on thing I learned with this crises is that services are the first to go down."
What are services? Does "manufacturing process engineer" qualify as a service job, or manufacturing job?
I always found the distinction to be silly and irrelevant. Services are demanded and supplied to support the economy, as are manufactured goods. (I'm not even talking public service here)
Comments
> The lines between manufacturing and services are blurring.
If there was on thing I learned with this crises is that services are the first to go down. Why? Because they're expensive and not a must have.
On the other hand real products like food, houses, vehicles, medicine... are the ones that will never go down (must have). But they have low margins and are not so attractive during growth periods.
So while the trends exposed here are probably true, the fundamentals will surely change with such large disruptions as the ones predicted here. And then the service providers will not have who to sell to anymore. Auto-balance
Note: I'm not an economist. I read however "Economy in one lesson"
Really? Car and housing prices have dropped significantly since 2008.
Food prices have dropped steadily for several hundred years (exceptions for misguided policy like the ethanol mandate, which spiked corn prices globally).
I think he may have meant "go down" as in, "go down in flames"
I look forward to being convinced that housing and car manufacturing are more stable and resilient than services.
exactly!
I assure you that healthcare, education, and sanitation do much better in a crisis than durable goods. Nobody is going to stop their college education because the rest of the economy collapses (they might even be persuaded to go to grad school), but people put off buying new cars, new computers, or anything else where their current item can last a bit longer.
These 3 are fundamental needs (so exceptional services - more like utilities).
But even here, unless life threatening situations, people will postpone action. (eg. drugs instead of surgery, disinfectant, ...)
With education I beg to differ: although it may look like a safe heaven, pursuing education for the sole purpose of temporary financial stability is probably not that smart. Reasons:
Yes, those services are fundamental needs. There are lots of services that are fundamental needs, and lots of goods that aren't. In fact, a greater percentage of services are fundamental than goods, because your contention that " services are the first to go down" is exactly the opposite of what we observe in practice.
"If there was on thing I learned with this crises is that services are the first to go down."
What are services? Does "manufacturing process engineer" qualify as a service job, or manufacturing job?
I always found the distinction to be silly and irrelevant. Services are demanded and supplied to support the economy, as are manufactured goods. (I'm not even talking public service here)