ALL INPredictions
Last updated Nov 29, 2025
Prediction
Friedberg
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Friedberg @ 01:11:47Right
economy
Business shutdowns in March 2020 in the US will likely continue for another 2–4 weeks, and the full economic impact of losing 2–4 weeks of revenue for small, low-cash businesses will become clear over the following few months, culminating in visible, materially negative effects by Q3 2020, and those effects will be severe (“ugly”).
I do think it's non-linear in terms of that second order and third order effects that we've been talking about. We even if we got back to business as usual in a month, we don't yet know how losing 2 to 4 weeks of cash flow is going to affect every salon... So we won't know for a couple of months... we're talking about Q3 when this all finally kind of comes to bear... what the shutdown that we're in right now and are going to continue to be in probably for another 2 to 4 weeks is going to do, and we're going to find that out over the next couple of months. But it's going to be ugly.
Explanation

Summary Friedberg underestimated how long shutdowns would last, but his core claim—that the small‑business economic damage from early shutdowns would show up a few months later and be clearly, severely visible by Q3 2020—matches what happened.

1. Shutdown duration: 2–4 weeks vs. reality (partly wrong) He said the shutdowns the U.S. was in during March 2020 would "probably" continue another 2–4 weeks. In fact, many states kept stay‑at‑home or equivalent orders far longer:

  • Example states lifted stay‑at‑home orders only in late May or early June 2020 (Illinois May 30, New Jersey June 9, New Hampshire June 11, etc.).(en.wikipedia.org)
  • Michigan’s stay‑at‑home order, begun in March, was repeatedly extended and didn’t finally expire until June 12, 2020.(en.wikipedia.org)
  • New Jersey’s stay‑at‑home order was lifted June 9, 2020.(en.wikipedia.org)

So the “2–4 more weeks” part was too optimistic.

2. Q3 2020 timing and severity of small‑business impact (correct) Friedberg’s main point was about second‑ and third‑order effects: even if you “only” lost a few weeks of revenue, the full impact on low‑cash small businesses (salons, restaurants, etc.) would emerge over the next few months and by Q3 it would be “ugly.” That is what we observe in the data:

  • A Yelp Local Economic Impact report covering business status as of August 31, 2020 (the end of Q3) found 163,735 U.S. businesses that had been open on March 1 marked as closed, and 60% (97,966) of those were indicated as permanently closed. Restaurants, retail, beauty, fitness, bars, and nightlife were among the hardest‑hit sectors, with tens of thousands of closures and a majority permanent—precisely the kinds of low‑margin, low‑cash businesses he was talking about.(trends.yelp.com)(cnbc.com)
  • The U.S. unemployment rate, which had been 3.5% in February 2020, was still 7.8% in September 2020, more than double pre‑pandemic levels, indicating severe and ongoing labor‑market damage through Q3.(trendonify.com)(cnbc.com)
  • Real GDP fell at an annualized −31.4% in Q2 2020, the sharpest quarterly decline on record, followed by a +33.1% annualized rebound in Q3. Even with the rebound, this pattern reflects an extreme shock and partial snap‑back rather than a quick return to normal; the unprecedented contraction and choppy recovery are consistent with Friedberg’s warning of non‑linear, “ugly” knock‑on effects rather than a mild, short‑lived hit.(cnbc.com)(bea.gov)

3. Overall judgment

  • Wrong element: He significantly underpredicted how long shutdowns would last (many were 6–12 weeks, not 2–4).(en.wikipedia.org)(en.wikipedia.org)(en.wikipedia.org)
  • Right, crucial element: He correctly foresaw that the real economic damage—especially to small, low‑cash businesses—would show up with a lag, and that by Q3 2020 the effects would be very clearly visible and severe. Data on mass small‑business closures, elevated unemployment, and historic GDP swings in mid‑2020 aligns with this forecast.(trends.yelp.com)(cnbc.com)(trendonify.com)(cnbc.com)(bea.gov)

Because the central, time‑specific economic prediction (severe, visible, small‑business damage by Q3 2020) came true, the overall assessment is “right,” with the caveat that his guess about shutdown length was too optimistic.