What an Overdue Vacation to Mackinac Island Teaches Us about COVID and Innovation

When I was little my family would move from our Brookfield home into a cottage on Nagawicka Lake in Delafield, WI as soon as school was out. I spent my summer vacation swimming, fishing, boating, butterfly hunting, annoying my four older sisters, and enjoying massive cookouts with our extended family. We took our baths in the lake. Time went slowly, and it was perfect.

One of the great tragedies of the COVID pandemic has been the forced interruption of those memory-making vacations and family gatherings, which is why I felt so fortunate to take a few days off around the Fourth of July to visit loved ones in northern Michigan. We took the ferry to Mackinac Island and spent the better part of two days there. The shops were busy, the hotels were full, masks were scarce, and it was the first time that things really felt back to normal.

In our investment commentaries, we have talked a lot recently about pent-up demand fueling growth as the economy reopens. I could tell by the traffic between Grand Rapids and Traverse City that I was far from the only one willing to splurge on a trip after spending most of the last year at home. As we will discuss in our upcoming quarterly economic and market outlook, households are in stronger financial condition than they were pre-pandemic, having saved what might have been spent last year and also benefitting from rising stock and home prices. With cash in their pockets, families are traveling, gathering, and spending again.

Mackinac’s Microeconomy

In fact, Mackinac Island was so busy that I was unable to get a reservation at the historic Grand Hotel when I booked our trip earlier this year. The Grand, a well-named Victorian beauty, opened in 1887 with stunning views of Lake Huron from its massive porch (the world's longest!). It is a sight to behold, with opulent furnishings, beautiful grounds, and sometimes creaky stairs that are somehow charming when imagining Mark Twain climbing them 125 years ago.

Instead, we found accommodations on the other side of the island. Our hotel was full, with multiple weddings taking place and many guests accompanied by their four-legged family members. In another sign of the times, we noticed staffing shortages at several restaurants both on-site and off. Labor shortages have been one notable weak spot amid the reopening, as employers report that they are unable to fill open positions.

We didn’t mind that it took a bit longer to be served, enjoying the slower pace of island time, but the shortages brought home for me the reality this economy has the capacity to expand further once supply disruptions are resolved.

My colleagues and I have heard from many clients that demand in their businesses is up 2-3 times from a year ago—but distribution bottlenecks are preventing them from meeting demand. We believe that these shortages and bottlenecks will work themselves out in the coming months, just as employment should rebound once schools fully reopen in the fall and enhanced unemployment benefits expire.

History Lessons

One of the extraordinary things about Mackinac Island is that you feel like you’ve stepped back in time. There are no cars on the island. The main transportation is a “taxi” service consisting of horse-drawn carriages. Absent that, you can hoof it yourself or ride a bicycle. I got my steps in as we ventured off the beaten path to check out the homes and gardens of the lucky few who call Mackinac home in the summer.

We also toured Fort Mackinac, which dates to the Revolutionary War. You can spend hours at the fort learning about Native Americans and early European explorers, including Jacques Marquette. A historical video discusses the island’s role in John Jacob Astor’s fur-trading empire, and extensive exhibits portray the daily life of American soldiers in the 19th century. But what struck me the most was a small exhibit about smallpox from 1846.

According to an exhibit at the fort, when news of two smallpox deaths on the mainland reached Mackinac Island, Army post surgeon Joel Martin vaccinated the entire garrison and gave instructions to the local Catholic priest to vaccinate civilians as well. The Army’s foresight in having a smallpox vaccine on hand and Dr. Martin’s quick actions are credited with preventing an epidemic on the island.

For me, the exhibit placed in perspective these extraordinary times we have lived through. Scientists first started developing smallpox vaccines in 1796, but it took until the middle of the 20th century for the disease to be fully eradicated. Although COVID is far less deadly than smallpox, modern science has given us the tools to develop effective vaccines—and get back to living our lives—in record time.

As romantic as the Victorian age was to visit, I was happy to return to modern life with my rescue inhaler for asthma and to regain the ability to FaceTime with family from hundreds of miles away. With all our challenges, we have so much to be thankful for living in this great country where the fast pace of life is matched by the breathtaking speed of innovation.

It made me proud as an American this Fourth of July to look back on how far we have come, and it makes me optimistic as an investor about how much more we will do. If you ever need a reminder about either, I’d recommend a visit to Mackinac Island.

And before you leave, try the fudge.

ABOUT THE AUTHOR

Brian Schaefer

VP Portfolio Manager | Johnson Financial Group

As Vice President, Wealth Portfolio Manager, Brian works with individuals, public entities, and non-profit organizations to create customized investment solutions. Brian is a member of JFG’s Fixed Income Group and Investment Research team.