Will COVID dampen our appetite for mass consumption?

Goldex Team

Editorial content

Gold prices have moved lower this week as several countries have eased their lockdown restrictions and economies begin to open back up, dampening demand for the safe haven and increasing traction for riskier assets like stocks. But with the pandemic far from over, this article looks at the long-term picture and examines whether the coronavirus will leave a lasting impact on the way we lead our lives.

Weapon of mass consumption

Pandemics thrive on masses: of people, animals, production. The Spanish flu epidemic of 1918, which killed around 500 million people worldwide, roared across the globe partly due to thousands of WW1 soldiers returning from the front.

Today’s equivalent is cheap, convenient, international mass travel. In 2018, a record 4.4bn people travelled by air. Living, holidaying and working in other countries has become the norm. That’s how it took just three months for a virus to spread from a single location in China to almost every country in the world.

But travel is just one example of how mass consumer culture might have made us more vulnerable to COVID-19. Manufacturing, leading to wholesale habitat destruction, is another.

Appetite for destruction

“For decades, we’ve sated our outsized appetites by encroaching on an ever-expanding swath of the planet with our industrial activities, forcing wild species to cram into remaining fragments of habitat in closer proximity to ours,” writes Sonia Shah, author of Pandemic: Tracking Contagions From Cholera to Ebola and Beyond.

“That’s what has allowed animal microbes such as SARS-COV2—not to mention hundreds of others from Ebola to Zika—to cross over into human bodies, causing epidemics.”

Then there’s our appetite for cheap, mass-produced food. Factory farms, experts point out, are just as likely as the ‘wet markets’ of China to spread viruses. With thousands of stressed animals crammed into airless, windowless buildings, these factories are ideal places for bugs to thrive, develop and make that leap into humans.

“Put all those conditions together and you have a perfect-storm environment for the emergence and spread of disease,“ Michael Greger, author of Bird Flu: A Virus of Our Own Hatching, told Vox.

In China, as Laura Spinney, author of Spanish flu pandemic history, Pale Rider, points out in the Guardian, the growth of factory farming has had a double whammy effect. It both pushed smallholders into specialising in ‘wild’ species, which could be vectors for disease, and, geographically, forced them to have their land nearer to the forests where virus-carrying bats have their habitats.

Up in the air

So might COVID-19 temper our appetite for mass consumption? It’s certainly doubtful that international travel will ever look the same as it did in 2019, particularly business travel.

Forced into using videoconferencing tools such as Teams and Zoom by global lockdown, companies which previously wouldn’t have countenanced anything less than face-to-face meetings are realising just how much money and time they can save now that the tech is easy and cheap.

“Sales and certain other kinds of business trips likely will remain essential and continue to be big revenue drivers for travel companies,” writes Dan Reed, aerospace and defence contributor to Forbes. “But lots of businesses are learning right now that they really can get more done, and do so at much lower cost, via teleconferencing than they previously believed.”

As for leisure trips, it’s likely that there will be big pent-up demand in the future, if a vaccine is found and the virus can be controlled.

But just as 9/11 had a profound effect on airport security, COVID-19 is likely to change the way we travel, with measures including social distancing on planes, better plane cleaning, temperature checks at airports and even ‘immunity passports’ showing if you have been found clear of the virus.

Sustainable systems

When it comes to food and farming, the EU says it will introduce new measures to make factory farming more sustainable.

“Healthy ecosystems lead to a healthy society and therefore it is not too high a price to pay to fix them,” Environment Commissioner Virginijus Sinkevicius told Reuters, adding that there was “strong evidence that the way meat is produced, not only in China, contributed to COVID-19.”

And it could be that COVID-19 forces us to think more locally about the materials we consume, and the resources we demand to make them. The pandemic has shown just how vulnerable global supply chains are: the early shutdown in Wuhan impacted manufacturers across the globe.

“In an effort to reduce the cost of everyday goods, Western manufacturing lost the ability to produce the necessities for combating the current pandemic,” writes Artem Kroupenev in Industry Week.

“We may soon see a surge of incentive plans to bring back manufacturing segments that are considered critical for national resilience and sustainability. Governments are almost certain to use domestic manufacturing as part of their plan to build up strategic resilience in the aftermath of the current crisis.”

Along with big numbers, pandemics tend to usher in big changes, which reverberate for decades – and many of those changes are positive, driving advances in public health and medicine. Nobody knows what the future will bring. But let’s hope it will be a more sustainable one.

Important disclaimer: this document is not an official research report and the views expressed in it are those of the authors. The authors are not registered research analysts and there is no assurance the trends mentioned will continue or that the forecasts discussed will be realised. Gold as a commodity is not a specified investment for the purpose of giving advice under the Financial Services and Markets Act 2000, therefore, this does not give rise to rights to claim compensation under the Financial Services Compensation Scheme