Why Are People Hoarding Toilet Paper? Here Are the Top 10 Reasons

Since I first started hearing about people hoarding toilet paper as a result of the coronavirus pandemic, I have wondered why this is happening. Hoarding behavior has occurred in other pandemics, including the Spanish Flu pandemic of 1918. But why toilet paper? And why is this happening now all across the globe?

I did a quick search of the Internet and here are the Top 10 Reasons I found for explaining this interesting phenomenon. Please keep in mind that most of these are not mutually exclusive – in other words, more than one of these explanations can hold true at the same time.

  1. Game Theory – Game theory would suggest that if you are in competition with others to buy a scarce commodity, and you think that others might be hoarding that commodity, you would hoard some yourself so that you don’t get left with none.
  2. TP has become associated in people’s minds as a symbol of safety.
  3. People feel the need to keep themselves and their families safe and taken care of. This is one more thing they can do in addition to self isolating and washing their hands to care for their families.
  4. Several “experts” have brought up the notion of the evolutionary-created behavior of avoiding disgusting and possibly infectious things, especially during panic situations and pandemics. TP is one way of cleaning up in a situation such as this.
  5. Some economists have suggested that people may be trying to eliminate one risk that is relatively easy to eliminate instead of tackling more costly risks with an unknown outcome.
  6. Hoarding is a way of feeling in control.
  7. TP is easy to hoard because it is cheap to buy; can be easily stored; and doesn’t have a limited shelf life.
  8. Hoarding is a rational and/or emotional human response to perceived or actual scarcity brought about by a disaster and often reflects feelings of panic, anxiety, and/or fear.
  9. The hoarding behavior results from an emotional contagion brought about by people observing others exhibiting hoarding behavior.
  10. Cleaning and hoarding are common responses to stress.

Economic and Investment Highlights

Last Week

The Wall Street Journal estimates that one-quarter of the U.S. economy has suddenly gone idle. Many economists believe that this is an unprecedented shutdown of commerce that has never before happened on such a wide scale.

Allstate, State Farm, and American Family are sending refunds to policyholders due to a sharp drop in accident claims as people are driving less due to the coronavirus.

U.K. Prime Minister Boris Johnson was transferred to intensive care due to complications from the coronavirus he contracted. Later in the week, he was released from intensive care as his condition improved.

Many Asian nations that had avoided tighter coronavirus-related restrictions are beginning to tighten more now with an increase in infections and lax observance of voluntary restrictions in their countries.

Nissan and Honda are furloughing U.S. factory workers without pay.

Exxon Mobil said it would slash its 2020 capital spending by 30%.

Suspicion of undercounting of Wuhan, China coronavirus cases and cases in other Chinese cities, along with new cases in Wuhan, is causing concern that there could be a second wave of the outbreak.

McDonald’s said global sales slid 22% last month.

Some retailers are attempting to get relief from impending large debt payments which are coming due in the near term.

Reviving the market for state and local bonds is becoming a challenge for the Fed.

WeWork has stopped paying rent at some U.S. locations.

Tesla has shut down its only U.S. assembly plant and has been furloughing workers and cutting salaried worker’s pay.

Bernie Sanders withdrew from the Democratic race. Joe Biden is now the presumptive nominee.

New funding for small businesses has run into roadblocks as Democrats and Republicans have been in a battle over the issue that has not yet been resolved.

Italy, Denmark, and Austria have begun planning for the reopening of their economies.

The number of people filing for unemployment benefits in the U.S. has now reached nearly 17 million.

In an effort to further help the U.S. economy, the Fed announced plans to make loans directly to states, cities, and mid-size businesses.

Saudi Arabia and Russia agreed in principle to oil production cuts; but Mexico retreated from the negotiations leaving a final deal in jeopardy.

Farmers and food companies in the U.S. are cutting back production.

The U.S. Postal Service is experiencing a large decline in mail volume and mounting financial losses as it continues to operate during the pandemic.

Mounting government and private sector debt is threatening an eventual economic recovery.

The U.S. budget deficit grew 8% in the first half of the 2020 fiscal year.

Disbursements of loan aid to small businesses which have applied for the loans have largely not been delivered yet.

U.S. consumer prices fell 0.4% in March due to the economic slowdown and the fall in oil prices.

The Dow, the S&P 500, and the Nasdaq all rose for the week. The Dow was up 12.7%; the S&P 500 was up 12.10%; and the Nasdaq was up 10.6%. The 10-year treasury yield ended the week at 0.722%. Gold closed at $1,736.20 for the week. Oil closed at $22.76 for the week.

The Week Ahead

This link takes you to Econoday’s Economic Calendar and Economic Events and Analysis which shows the upcoming economic reporting events scheduled in the week and months ahead.


Note: The models below may not capture the impact of COVID-19 beyond their impact on GDP source data and relevant economic reports that have already been released. They may not anticipate the impact of COVID-19 on forthcoming economic reports beyond the standard internal dynamics of the models.

Note: The comments that follow are derived from the economic indicators referenced in the Resources section of this newsletter and other sources in this report.

The Aruoba-Diebold-Scotti Business Conditions Index (ALS) had been trending up for several weeks from having dipped in 2019. Recently with the advent of the economic collapse, the index crashed. This is an extremely negative indicator for the economy on a short-term basis.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2020 is -0.3 percent. This reading continues to support the ALS model assessment of a deteriorating short-term economic environment.

The New York Fed Staff Nowcast stands at -0.4% for 2020:Q1 and -7.9% for 2020:Q2.

The Chicago Fed National Activity Index (CFNAI) showed an increase in economic activity in February. The Chicago Fed National Activity Index (CFNAI) was +0.16 in February, up from -0.33 in January.

All told, these short-term economic indicators are a negative analysis for the economy, at least on a short-term basis.

Expectations that stock prices will rise over the next six months is now at 34.9% in a recent AAII Sentiment Survey. The historical average is 38.0% for the survey. 22.4% of the investors in the survey described their short-term outlook as neutral and 42.7% were bearish. Please see the AAII Sentiment Survey for the complete results.

The latest Gross output (GO) reading suggests moderate economic growth as we enter 2020.

On a longer-term basis, the forecasters in the Philadelphia Fed’s Survey of Professional Forecasters (as of February 14, 2019) predict real GDP will grow at an annual rate of 1.7 percent for the first quarter of 2020, 2.1 percent for the second quarter of 2020, 2.0 percent in the third quarter of 2020, 2.1 percent in the fourth quarter of 2020, and 2.2 percent in the first quarter of 2021. On an annual-average over annual-average basis, the forecasters predict real GDP to grow 2.0 percent in 2020, 2.0 percent in 2021, 2.0 percent in 2022 and 2.0 percent in 2023. The forecasters predict the unemployment rate will average 3.6 percent in 2020, 3.6 percent in 2021, 3.7 percent in 2022, and 3.9 percent in 2023. The next survey release date is May 15, 2020.

The National Association for Business Economics (NABE) released an Outlook Flash Survey on April 10, 2020. The NABE panel expects GDP declines in Q1 2020 and Q2 2020, and upticks in Q3 2020 and Q4 2020. The panel believes the U.S. economy is already in a recession and predicts real GDP will grow at an annual rate of -2.4 percent for the first quarter of 2020, -26.5 percent for the second quarter of 2020, 2.0 percent in the third quarter of 2020, 5.8 percent in the fourth quarter of 2020, and 6.0 percent in the first quarter of 2021. The forecasters expect unemployment to average 3.8% in Q1 2020. The median unemployment rate projection for Q2 2020 is 12.0%. The unemployment rate is expected to fall back to 9.5% at the end of 2020, and to 6.0% at year-end 2021. The panel’s forecast for the PCE price index less food and energy calls for a slowdown in the annual rate of change from 1.7% in Q1 to 0.8% in Q2 2020. The panel expects the rate to increase gradually to 1.7% in the last half of 2021.

For a more in-depth review and analysis of the economy, please see our mini-book on economic analysis and forecasting entitled: Simple and Effective Economic Forecasting.

Stock Market Valuations

Our estimates of the market valuations for two stock market indices, the Dow Jones Industrial Average (DJIA) and the Standard & Poor’s 500 (S&P 500), can be found in the file below:


During this time of global flux due to the coronavirus, I am leaving the Conclusion discussion below the same as was posted on March 23, 2020. The March 23, 2020 discussion still adequately reflects my thinking on the current state of affairs.

Reprinted from March 23, 2020

Up until the past week, the economy had been in a stable but somewhat vulnerable state. Nonetheless, it had remained fairly strong. In fact, robust consumer spending and strong labor market conditions had given us confidence that the economy, which had been in its tenth year of expansion, could continue to grow. But we were cautious on this outlook. There were several reasons for our caution. U.S. business growth had been mixed. And global economic growth had been mixed as well. The new coronavirus was becoming a global economic threat, although it was still too early to tell how much of an effect it would ultimately have. Debt is at high levels for consumers, businesses, and government (at all levels of government). Finally, this is an election year that will likely have significant consequences either positively or negatively depending on the outcome of the elections. And of course, it is still too early to tell what the outcome of the elections will be.

In just a few days, the coronavirus’s effect on the economy and the markets went from a ripple to a tsunami. Businesses are shuttering, events are being cancelled or postponed, grocery store shelves are empty, and people are being asked or ordered to stay home. The markets are now deep in bear market territory. The effects on the economy, even given the short time that the economy has been retreating, may be with us for a long time. There is now a much greater risk of a recession, and there has even been some talk of a depression. The government, the Fed, Republicans, and Democrats, and pretty much the entire country, is trying to get the virus under control and is coming up with plans to mitigate the long-term economic effects caused by the virus. But the virus has impacted the economy – in a significant way – in just a short time. How long lasting the effects will be no one can tell right now. The economy has been largely shut down and remains so today. It takes time to restart the economy after a situation such as what is occurring at the present time.

Given these events and the rapidly deteriorating situation, as I said last week, I would caution not to panic. The economy and the markets will get better. The situation is bad – there is no doubt about that – but it will turn around. The real question is when will it turn around? No one knows that at the present time. But it will turn around.

For now, review your investment portfolios. It is highly likely that all or most of your stocks are down. You should not consider selling the bulk of your stocks – only consider selling companies that are not sound companies. But do recognize that as the economy deteriorates, even good companies will be affected.

For stock market value hunters, we believe it is still too early to jump back in. We will be closely monitoring the markets using the many tools and models that we have developed over the years to assess the economy and the markets. We will use our best judgement and thoughts to let you know when we believe things are turning around. The turnaround hasn’t happened yet.

We believe it is important to maintain a long-term view toward investing. But for now, just sit tight. Eventually, this means that you should continue building your investment portfolio using the Cassandra Stock Selection Model to select individual securities that offer growth and value opportunities.

Chart for Review and Thought

It’s Not Only Toilet Paper in Short Supply

Simple and Effective Economic Forecasting Model

Note: The table and chart below have not been updated. However, we believe that a recession is quite likely. In the chart below, the bottom green line shows what a recession could look like.

Notes (GDP Growth Chart):

  1. See the July 8, 2019 Commentary for an introduction to this model.
  2. Actual numbers 2007 through 2019; forecasted numbers thereafter.
  3. Normal GDP growth is typically in the 2% to 3% range.
  4. A recession is generally defined as two consecutive quarters of negative economic growth as measured by a country’s gross domestic product (GDP).

Thought for the Week

“It ain’t over till it’s over.”~ Yogi Berra


Dr. Wendee spoke at the Investment Club of America’s annual economic summit, called Econosummit, on Sunday March 1, 2020 in Las Vegas.

Dr. Wendee attended the The National Due Diligence Alliance (TNDDA) investment banking conference, which was held March 6-8, 2020 at the Four Seasons Resort in Dallas, Texas. This is a conference held several times throughout the year for investment bankers and registered investment advisers to learn about new opportunities in the Alternative Investment asset classes.

TNDDA Meeting in Dallas, Texas

We have been researching the use of crowdsourcing for investment ideas. We will be sending a survey out in the next few weeks to get your input on the economy and the markets; and to get any investment ideas that you would like to share. We will compile this input and distribute the results to you and our other subscribers. We have been testing our crowdsourcing models with students and have been having good success and results.

Dr. Wendee has been researching and writing a new theory of economics known as, The Value Creation Theory of the Economy (also known as, Intrinsinomics). The full paper on Intrinsinomics will be published in the near future.

Finance 3350: Personal Finance-Portfolio & Risk Management– Dr. Wendee started teaching Finance 3350 – Portfolio & Risk Management at California State University, Los Angeles (CSULA) starting January 2020. Dr. Wendee teaches courses in Management and Finance at CSULA.

Business 4970:Strategic Management – Dr. Wendee started teaching  Business 4970:Strategic Management  at California State University, Los Angeles (CSULA) starting January 2020. Dr. Wendee teaches courses in Management and Finance at CSULA.

Business 218 – Macroeconomics – Dr. Wendee started teaching Business 218 – Macroeconomics at California Baptist University (CBU) starting January 2020. Dr. Wendee teaches courses in Finance and Economics at CBU.

Dr. Wendee presented a paper on his new theory of economics known as, The Value Creation Theory of the Economy (also known as, Intrinsinomics), at the International Leadership Association’s annual global conference which was held in Ottawa, Canada last Fall.

Dr. Wendee is working on a financial planning modeling program which will be available in the near future. The modeling program is designed to assist anyone in creating a financial plan and is customizable for each person’s unique financial planning goals. A working draft of the model is currently in beta test with students. Click this link, schematic, to go to the clickable document under the subheading Financial Planning Process (Draft) in the Intrinsic Value Wealth Report to see a draft of the schematic for the new financial planning process.

Dr. Wendee has been developing an econometric model specifically designed to monitor and forecast the global economy as this current economic crisis unfolds. This new econometric model is based on other econometric models that he has designed and have used for many years. You can find some of these earlier models in Book # 6 – Simple and Effective Economic Forecasting in the sister website to this website which is called the Intrinsic Value Wealth Report. The new econometric model has been constructed with some additional tools and methods that he has learned and some that he has developed over the last several years. He will be talking more about this new econometric model in this Commentary over the next few months. His comments and forecasts on the economy and the markets going forward will be based to a significant extent on this new model.

Intrinsic Value Wealth Creation pyramid

We always conclude our commentary with a discussion of the Intrinsic Value Wealth Creation Pyramid. The Intrinsic Value Wealth Creation Pyramid is designed to show some of the major categories for building wealth. It is the result of many years of study of the wealth building process; experience working with clients who have built considerable wealth; and my own personal experience building wealth. Newsletter subscribers should consult the Intrinsic Value Wealth Creation Pyramid as one of many useful investment tools while considering their investment plans.

The chart in this section is an expanded version of the Intrinsic Value Wealth Creation Pyramid Chart referenced in the Forbes.com article entitled, Nine Of The Best Ways To Build Wealth.


See our Resources section for links to economic and other resources used in the preparation of this Commentary.

This entry was posted in Economic & Business Chart Room, Economic Outlook, Entrepreneurship, Focus List, Investment Recommendations, Investments, Notes From The Field, Special Situations, Uncategorized, VDI/REEP, Visionary Ideas and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.