This is the first column in a five-part Heard on the Street series on how the American economy might look once the Covid-19 pandemic is over.
With this month’s announcements of two highly effective Covid-19 vaccines, enough Americans should be inoculated over next spring and summer for normal life to begin to resume. It won’t be quite the same as before, though: Our behavior will have changed, with profound effects on the economy.
Any of these changes on their own could well have redirected tens or hundreds of billions of dollars in government and consumer spending from one place to another, but they are all happening at the same time. Some of the trillions of dollars’ worth of aircraft, cruise ships, gyms, shopping malls, office buildings, hotels and convention halls have been sitting idle may not be needed even after it is safe to use them. Others like e-commerce infrastructure can’t be built fast enough.
First we have to get through the next several months. With new cases rising again throughout the country, more people’s livelihoods will be damaged and more businesses will be driven to the brink. The losses have been most acute among service-sector businesses — especially smaller ones. Many have failed and the danger is that, with financial resources running thin during this latest Covid upsurge, more will follow in the months ahead. As a result, some of the millions of people who were put out of work by the crisis won’t have jobs to come back to when it ends.
The longer they remain out of work, the more their skills erode and the harder it is for them to find work again. That, in turn, can lower the pace at which the economy is able to grow. Those who work in some of the hardest-hit industries, such as restaurants and hotels, could have the hardest time overcoming the setbacks suffered from the crisis. The gaps between rich and poor could widen as a result.