by Jeanette Garretty, March 11, 2021
What will the economy look like in a post-pandemic world? Will it look like it did pre-pandemic?
Some parts of the US economy will look very different post-pandemic, but they won’t feel that different because we have been living through the evolution for at least a year. For example, telemedicine has experienced a much more rapid and widespread acceptance than anyone in the medical community would have thought possible just 18 months ago. That the industry already had been moving in the direction of greater use of remote diagnosis and service well before the pandemic is obvious, given the speed with which doctors and health care services were able to adapt to the restrictions on in-person visits. Other examples of such changes are restaurant and grocery delivery, financial
services (apps, online money transfers, virtual meetings) and, of course, online shopping for just about anything.
On the other hand, parts of the post-pandemic economy may look comfortingly familiar, possibly disguising massive changes underneath the veneer of normalcy. Factories will churn out products for global distribution, as they have been successfully doing for much of the pandemic. Yet those factories are likely to be running quieter and cleaner and more efficiently due to investments in new machinery, equipment and technology. And the factory floor may look quite different as pandemic-related labor force adjustments persist. Cargo ships will continue to arrive and depart ports, with trucks and warehouses lined up to facilitate imports and exports, but the volume and locations may be
different as companies re-think the pandemic-exposed vulnerabilities of global supply chains. Airlines will populate the skies with airplanes –airplanes perhaps carrying far more leisure travelers than lucrative business travelers and possibly bearing the tail-marks of fewer carriers.
The most notable economic difference in the post-pandemic world, however, will be the speed of economic growth, the adjustment of prices (both up and down), and the evolution of monetary and fiscal policy. US economic growth is currently forecast at 6%+ in 2021, followed by another 4-5% growth in 2022—growth rates that have not been witnessed in this country in a very long time. World economic growth likely will be in the range of 5%. Chinese economic power will become even more visible, and contentious, than it was in the decade preceding the pandemic. Central banks and government authorities will be confronted in ways not seen before with challenges ranging from
economic stimulus and debt management to trade agreements and regulatory policies, including anti-trust.
What changes caused by the pandemic will remain permanent?
“Permanent” may be the wrong word to use right now.
One way to think of the pandemic is as a massive tectonic-plate earthquake, shifting the ground so much
that it spawns hundreds of other follow-on tremors, some quite significant in magnitude. It is unlikely that businesses currently operating remotely – and doing it quite well – will continue without in-person offices of some kind. But where will those offices be located, how much space will be used and what will the implications be for the commercial real estate industry? Online shopping already had impacted retailers and retail space before the pandemic, leading to a number of store closures and bankruptcies, but now there are new retailers in new locations, often integrating online shopping as part of the business model. It will require months, if not a few years, to clearly see the permanent effects of pandemic-motivated changes in these and other areas of the economy.
There are changes that might be tempting to call permanent but require careful examination for “wishful
thinking.” One popular forecast is for greater cooperation among states and between nations on public health issues, including greater investments in public health capabilities which have been exposed as being under-invested in the United States. Another reasonable expectation is for a fundamental and permanent change in the nursing home industry and the effectiveness of its regulation, accompanied by greater support for home health care services. There is also hope that the pandemic, in shining a light on the inequities of broadband access, health care services and public education across the United States, will lead to permanent improvements in these areas, with subsequent increases in both productivity and community cohesiveness. It is worth remembering that if wishes were horses, beggars would ride . . . and yet, parts of these desired, permanent changes are more likely to come to pass than not.
Scientists and academic researchers have been discussing, with a certain amount of wonderment and joy, the extraordinary cross-institution, cross-border cooperation which blossomed in 2020 in the pursuit of solutions to the coronavirus horrors. Importantly, this cooperation was often cross-disciplinary, involving artificial intelligence experts, behavioral economics scholars and big-data political scientists. It is difficult to see this change as not permanent, except to envision even greater expansion of information sharing and partnership. In a world which may be looking to science to provide greater leadership for this century in numerous areas, it may be enough that new-found research cooperation is the one development that proves to be a permanent result of the pandemic.
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