Can you be confident about an economy you can't see?

Canada's economy may be on life support, but it is still hanging on. Even on streets that seem empty and shuttered, there are a few businesses getting by, or even thriving.

The bookstore on Beechwood Avenue looks closed, but every so often a customer pops by to pick up an order from the bookrack hidden in the vestibule. At Life of Pie, the neighbourhood bakery/restaurant, the tables are stacked up, and the lights dimmed - but in the back the kitchen is humming, as the staff works hard to fill a steady stream of orders. When I ordered take-out from the local  Indian restaurant, the owner sounded busy and cheerful for the first time in months. The local farmer's market has moved on-line - no more lingering over the potatoes and fighting hipsters for the last bag of arugula. All orders now have to be in by Thursday noon, paid in advance by e-transfer, and picked up in a quick, physically distanced transaction. There is economic activity going on, but much of it is invisible, and hidden at home. As for the rest - if you don't look closely, you'll miss it.

I hope that policy makers can be creative and figure out ways of opening up more local businesses. But even if they do, what will that do for consumer confidence? Can you be confident in an economy that you can't see?

Comments

[Jacques René Giguère]

What part of the economy is invisible? My groceries and medications are available, my bookstore delivers, if I want take-out I can even have wine, beer and cocktails (available in Québec), my friend’ AA meeting is on Zoom. A good lot of industrial production continues.
What is closed is non-food retail stores, hotels and airlines. Important yes but if you look at the input-output matrix,(always a reflex for a Québec economist) nothing is on the top line. So nothing that really crash the economy.
Unlike the US we have policies that keep confidence in the social compact..We are not at Stunde null.

[Frances Woolley]

Suppose our plans depend upon our future expectations of the economy. Suppose also that prophecies are, to some extent, self-fulfilling, so the actual path of the economy depends upon people's expectations of that economic path.

Now imagine that our expectations are based not only on our own economic situations, but on the economic situations of everyone around us.Typically I can observe (at least to some extent) the economic situation of the people and businesses I interact with. I can see, for example, if a business is busy or quiet. I can see whether my students are wearing Canada Goose jackets or coats from Value Village.

With an invisible economy, it's harder to form expectations about the future state of the economy. Is that a problem? I don't know, but I suspect it might be.

[Jacques René Giguère]

Don’t worry Frances, the young’ uns are busy Instagraming their latest online purchases. Not counting the Zoom split screen where teenagers are busy upstaging each other.

[Frances Woolley]

Jacques René - cute!

Still, what I'm trying to get at here is the larger question of how expectations about the future of the economy are formed, and how much these depend upon things that were once visible, and are no longer so...