Imagining a Post-Covid American Economy
Beginning in February 2020, the United States is experiencing its worst macroeconomic downturn since the Great Depression of the 1930s. COVID-19 has claimed 300,000 plus lives and U.S. government measures to combat the spread of the disease have had serious economic side effects. With high unemployment rates, increased government spending, and business shutdowns, many are left wondering what the future U.S. economy will look like. While the Coronavirus pandemic is sure to alter American society, it will mainly accelerate already existing trends. It is probable that the global catastrophe that we are experiencing now will shape our future world as much as the World Wars and Great Depression did.
For decades, the United States and the developed world has moved in a globalist direction, pursuing free trade deals and allowing the offshoring of jobs. It is possible that this pandemic will strike a lethal blow to globalization and U.S. reliance on China. COVID-19 has proven that the United States cannot rely on others for necessary medical equipment and supplies. The country needs to be prepared for another catastrophic situation. During the 2016 election cycle, Donald Trump rose in popularity over his calls to bring back American manufacturing jobs to secure the economic security of our nation and to not become over-reliant on China. This sentiment has gained in popularity over the last decade and the Coronavirus pandemic has only reinforced the idea that America must once again become self-reliant and gain more control over global supply chains. With nationalism and populism on the rise in Europe and the United States, it is likely that an interest in American manufacturing will rise to the forefront of our political debate.
The At-Home Workforce
While many businesses were mandated by local governments to physically close, many white- collar workers were able to shift to working online. While before the pandemic, working from home may have been seen as less effective, employers are likely to take advantage of the work-from-home-equipped workforce. For large businesses headquartered in a city such as New York, a reliance on remote employees is a major financial advantage considering the high cost of prime real estate. With advancements in technology and online platforms, this shift had already been seen before the pandemic although experimentation of the work-from-home model will further popularize the idea. As reported in May 2020 by NBC News, a spokesperson for Twitter had announced that the company will allow select employees to work from home forever. “Opening offices will be our decision, when and if our employees come back, will be theirs.” the spokesperson said.
In terms of education, the pandemic has brought to light many issues with the current education system in America. For one thing, as trends of rising anxiety among children has been noticed, the economic toll and loss of family members will likely have school administrators rethinking forms of in-school support for students’ mental health and wellbeing. According to a study done by the Carsey School of Public Policy at the University of New Hampshire, only 17.8% of school districts meet the American School Counselor Association’s student-to-school counselor ratio of 250:1 and that rural districts are the most likely to to lack any school counselors. Additionally, a report by the Federal Communications Commission found that in rural areas, 1 in 4 students lacked access to broadband internet access at threshold speeds. With online education prevailing throughout the pandemic, many of these students have little to no access to their school work. These two issues related to children's education in America are likely to receive greater attention in the near future.
Another area of concern among young Americans is the affordability of higher education. As the pandemic continues to wreak economic havoc on families across the country, the prospects of many high schoolers to go to college are diminishing. According to the CollegeBoard, The average annual tuition for public, four-year colleges for the 2019-2020 school year was $10,486 for in-state residents, and $15,873 for out-of-state residents, excluding room, board, and other costs. Also according to the CollegeBoard, average state school college tuition has risen 8% in the last five years and the 58% of bachelor degree recipients who take out student loans accumulate an average $29,000 in debt by the time they finish their college education. With this in mind, it is likely that the economic crisis will cause a reckoning among public officials and university administrators in which to address our education crisis.
A Change in Consumer Spending
Of the many visible effects of the pandemic, the habits of the American consumer have changed greatly. With many weary of leaving their homes to go shopping, online retailers and delivery services have seen a spike in popularity. This change may be here to stay with more and more Americans having experimented with online shopping during these last few months.
The pandemic will also decimate the businesses and industries that have been weakening in the years prior. “It’s only when the tide goes out,” Warren Buffet has said, “that you learn who’s been swimming naked.” He means to say that when the economy was good, even the struggling businesses managed to get along. Now that the COVID-19 has disrupted the economy, failing businesses and business models will not be fit to survive. A noteworthy example is the movie theatre industry. From 2015 to 2020, the industry shrank by 16.6% (Source: IBISWorld), presumably due to the rise of online streaming platforms.
All in all, the Coronavirus pandemic has upended American society in many ways. Only time can tell how its lasting effects will shape our future world and economics.