Through multiple online articles that discuss future inflation, there may’ve been hedging about the importance of cost-push mechanisms. A tendency, if not a consensus, is observable toward concern about supply prices or shocks. Under such reasoning, barriers to trade could result in inflation, as might rising labor prices or wages.  However, technology, which is identified with increasing supply, sometimes via complicated mathematics, has not been as topical in non-specialist media. 

Innovations perhaps help to explain why you can have very political protectionism, through four years of the Trump administration, AND a pre-election recovery in manufacturing? Gritty analysis of inputs has not been done on the price of metals–steel up recently and iron being down–but some lumber prices are up about 260% over the past five years. Tariffs on Canadian softwood have been focal. 

A wood substitute is perhaps feasible? Any alternative, such as fiber cement products, as offered by James Hardie (JHX), could still be worth looking into. If overall quantities of inputs available keep going up, it could offset lumber. 

There is a likelihood that 5G communication speeds will present new technologies. What they ultimately are is challenging to predict. How can faster internet connectivity help movie theaters, the film industry, or network broadcasting though? Streaming media is on the horizon. Next generation networks must enable future apps:  smartphones should be at the heart of it. 

There could be other insight. Watch for a trend toward a reduction in restaurant dining space, and an increase of kitchens with delivery facilities, Domino’s or Papa John’s versus the full pizza parlor being exemplary. Maybe technology can be attributed to any subdued price change of food-away-from-home over future years. In any post-pandemic world, persons might also return to restaurants as before, or there could be long-term trends that differ from the past.

Some of the above might overlap with products involved in international commerce that each have their own stories, such as chlorinated chicken, wine, or motorbikes (which can be faster in traffic). Barriers against the export of food might make it cheaper in other markets, including a producer’s own. Pharmaceutical prices are similar to tuition and fees: both can be political issues and it is not clear if anything else shall cheapen them.

Anyhow, let’s say that square footage allocated to conventional restaurants and dining facilities, as a percentage, essentially stays the same or declines. Shopping malls, and their tenants, have been in trouble for a long time. Movie theatres might be grouped into a similar category. Other big parking lot users, such as used car dealers, give way to online vendors. Trends toward work from home could be permanent. High lumber prices, and perhaps other increased costs, coincide or potentially reinforce dynamics.

That would leave, if Covid-19 is defeated, the following among users of commercial real estate:  fitness clubs, grocers, some shopping outlets, auto parts retailers and health care facilities. Hotels, despite Airbnb type of rentals, too. If land or its rent are in fact cheaper, it should aid some lessees or effective property investors.

Still, though Covid-19 is catastrophic, a hit to demand, vaccine data has been encouraging. An extended recovery, and what has been described as a “Reopening,” seem likely. What should permanently be open may be changing. 

If there are not buyers of commercial real estate, its prices may be similar to that of food away from home over the long term. Cost-push inflation may be relevant. Technology should be also.

3/17/21 The US Federal Reserve is now predicting inflation as high as 2.4% before dropping to 2% in 2022.

3/18/21 Dollar General is now doubling down on brick and mortar…here

4/14/21 Food away from home is up 3.7% YoY, as compared to all items at 2.6%. Further, “Limited service meals” are priced 6.5% higher, the largest increase in the history of the index. Time will tell if this holds up, as it seems consistent with pandemic effects.