It has been a long pandemic, from which the country is still emerging, but the U.S. economy is working its way back. Barring another lockdown, it will return to pre-pandemic levels, but it will not look the same.
The coronavirus pandemic has changed some aspects of the economy forever. Wharton experts talk about the ways the economy has recovered to where it was before the pandemic and what parts have changed permanently.
Jeremy Siegel, a finance professor, feels this year is going to be great for the economy with huge expansions.
“I think it’s also going to be a year of inflation,” he says. “Not dramatic inflation, but a lot more than what we have been used to—3%, 4%, perhaps even 5%. This is going to be good for the stock market, because I do not think that the Federal Reserve is going to tighten credit into 2022, maybe not into 2023. We’re going to keep low short-term interest rates and a hot economy.”
Siegel says while inflation will begin to increase, and the stock market will be pushed ahead because corporate profits are going to be very strong, the loser is going to be the bondholder because interest rates on the long-term bond are going to rise.
“We’re going to see the 10-year bond rise to 2% by the end of the year, maybe even 3% by the end of 2022,” he says.
Siegel predicts an increase in taxes this year, both in corporate and personal taxes, “because the Democratic administration under [President Joe] Biden will want to scoop up some of these extra profits that corporations are making.”
Siegel says the current administration is going to “undo a lot of the previous administration’s tax cuts that we got over the last four years. We’re going to have a second infrastructure bill, that’s where new taxes are going to come in.”
Last summer, there was a dramatic expansion of Federal Reserve liquidity, government support, and the money supply.
“I said then, ‘This liquidity is going to go into the stock market, and then it’s going to go into the economy once people feel comfortable with beginning their normal activities again’—and that is exactly what is happening,” says Siegel.
Wharton Assistant Professor of operations, information, and decisions Hummy Song discusses the many lessons learned regarding health care delivery over the past year. She breaks it down to four important takeaways.
First, Song says, coordination is key. The pandemic has reminded everyone why it’s important to have an emergency preparedness strategy in place that is ready to be activated on a moment’s notice.
“As part of this strategy, states and regions should facilitate coordination across hospitals, which normally compete with one another for patients and revenue, to develop a centralized system that will facilitate load balancing,” she says.
Second, when it comes to healthcare delivery, the scarcest resource is staff—not PPE or beds.
“As cases surged across the country, health systems that were set up to keep their staffing lean pleaded with their employees to take on extra shifts and scrambled to hire travel nurses and respiratory therapists on short-term contracts,” she says. “The burnout and stress, combined with exposure and infection among health care providers themselves, made staffing even more strained in hospitals.”
Telemedicine became a lifeline for many patients and providers. As a result, the third lesson learned, according to Song, is embracing technologies.
“Willingly or not, it got both parties beyond the hurdle of adopting this technology,” she says. “Going forward, insurers and policymakers will need to work with health systems to support continued access to high-value telemedicine.”
And finally, Song points out that a silver lining of the pandemic is that it gave us an opportunity to reassess the value of health care.
“By measuring the consequences of altered, deferred, and missed care, researchers can help answer some challenging questions around the value of care,” says Song.
Wharton marketing professor Barbara Kahn’s research indicates some changes in retail and shopping will become permanent.
“Obviously, there has been a huge acceleration to online shopping,” she says. “This change in behavior not only affected where people shopped but also what they bought.”
But will shopping be the same when consumers return to the stores? No, says Kahn.
“Consumers had a whole year to form new habits and expectations, and those changed behaviors will not just vanish,” she says.
Kahn says shopping will become “omni-channel,” meaning a seamless integration between offline and online experiences.
“For the most sophisticated retailers, the omni-channel experience will be customer-focused,” she says. “This means that retailers will be everywhere their customers want them to be 24/7.”
Trends that accelerated in the pandemic, such as, “buy online, pick-up in the store” or appointment-based shopping, will be the norm, and physical retail will reconfigure to make this more possible, according to Kahn.
Wharton management Professor and Deputy Dean Nancy Rothbard says working from home is likely to become more prevalent in the future.
“What we’ve seen throughout the pandemic is that managers have been really surprised by how incredibly well remote work has gone for so many people,” she says. “There were a lot of questions about whether people could be productive while working remotely from home, but we’ve seen people really rise to the occasion.”
Rothbard doesn’t think employees will be doing remote work all of the time, but some proportion of remote work is here to stay.
Barbara Kahn is the Patty and Jay H. Baker Professor and Professor of Marketing at the Wharton School.
Nancy Rothbard is the David Pottruck Professor, Professor of Management, and Deputy Dean at the Wharton School.
Jeremy Siegel is the Russell E. Palmer Professor Emeritus of Finance at the Wharton School.
Hummy Song is an Assistant Professor of Operations, Information and Decisions at the Wharton School.
