Post-COVID changes will require significant adaptation – by individuals, firms, and policymakers.
We are struck by the impressive resilience of the global economy. But a return to normalcy is not an "all clear."
How COVID changed the landscape for investment and capital allocation
As the COVID era recedes, we can assess which pandemic shocks have faded and which will likely persist. The more we can clearly perceive these long-term changes, the more effectively we can allocate capital for the future.
The more permanent impacts of COVID will likely include:
Workplace technology will match labor and capital at a distance
Supply chains will become more diverse and resilient
To bring inflation back to target will require below-trend growth
Dense urban business districts will evolve or decay
Companies will see the benefits of positioning, pricing and policy support
How COVID-era birth, death, migration and participation rates affect labor and inflation
The lingering effects of the COVID pandemic on the labor supply and economy are not directly related to mortality, though millions of deaths caused incalculable human suffering. The impacts are indirect – but may be long-lasting.
- COVID mortality did not affect the labor supply (most victims were not working); rather, COVID shrank labor supply through:
- Surging early retirements
- Long COVID’s impact on workers
- Temporarily lower birthrates that will affect labor later
- Lingering impacts (and constrained immigration) should push up wages
- Flexible workplace tech may ease some pressures
The visible hand: Government is playing a stronger role in the economy
Post-COVID, fiscal policymaking has a more expansive vision of government intervention in the economy. A range of unprecedented supports are now in place.
- COVID kickstarted unprecedented fiscal support, across developed economies
- Support surged for health care, businesses and consumers, through central bank- financed deficits
- Public spending is proving lasting on:
- Medical research
- Infrastructure
- Shoring up valuable industries and supply chains
- Subsidies designed to attract private capital
COVID rippled through work and home life, affecting offices, supply chains and housing
Work-from-home, an interim solution, proved lasting; rising e-commerce means deliveries to 150 million doorsteps; and demand for homes is surging during a shortage. What lies ahead for offices, supply chains and housing?
Obsolete office buildings have grown less viable vs. amenity rich “trophy” assets as hybrid work patterns have taken hold
Rising e-commerce requires massive warehouses at ports and highways, and logistics facilities near populations.
An ongoing housing shortage has put home buying out of reach for many younger adults, while creating an investment tailwind in single family rentals.
COVID’s impacts include:
Authors
Stephanie Aliaga, Kevin Bedell, Alex Bell, John Bilton, Andrew Brill, Nicole Byrd, Chris Ceraso, Luigi Cerreta, Eric Li Cheung, Jason DeSena, Kris Erickson, Peter Epstein, Mark Ferguson, Jake Fowler, Greg Fowlkes, David Gao, Jared Gross, Kay Herr, Danielle Hines, Dr. David Kelly, David Lebovitz, Tony Manno Jr., Godwin Marfo Ahenkorah, Natasha May, Andrew Norelli, Sagar Rastogi, Katarina Roele, Jeff Roskell, Anya Schiess, Pulkit Sharma, Sylvia Sheng, David Small, Iain Stealey, Thomas Stoegner, Catie Tsao, Karen Ward