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Zombies, robots and great unknowns lurk as the US economy recovers from a pandemic

Don’t let anyone tell you otherwise. The US economy is going through an unprecedented period after being shut down by a government decree. Whether or not you have a PhD in economics or not, how it will unfold is predictable.

In the immortal words of former Defense Secretary Donald Rumsfeld, there are many “known unknowns”.

Big questions are being asked of workers. Will your company survive? What will the office even look like? Will you be replaced by artificial intelligence?

It’s hard to know. There are fierce debates among economists about how things will play out. We never had a post-war recession where the services sector was battered. It has always been the manufacturing sector that leads to ups and downs.

The clues will be in the economic data. But there is no magic bullet.

“Mankind for 5,000 years has been searching for three indicators that tell you how south the economy is going. They don’t exist. Rajeev Dhawan, director of the Center for Economic Forecasting at the J. Mack Robinson Business College at Georgia State University, said because what worked during the last downturn will never work in the next round. according to the.

At MarketWatch, we will keep an eye on these big questions and tell you how and when answers and new “unknowns” will emerge.

Here are some basic questions faced by the economy:

Back to the office would even be like?

There is a lot of talk that employees can “share time” in offices, taking turns several days a week.

This is going to be bad news for restaurants, downtown sandwich shops and dry cleaners as people spend less time working.

Jerry Nickelsburg, faculty director at UCLA Anderson Forecast, says he thinks there’s a lot of “fantasies” going on about office work. He said there is no evidence that bosses will ultimately not want employees to work in the office every day.

“We might wish we wouldn’t work every day, but there’s no data showing we won’t work every day,” he said.

And the idea that companies will let their workers remotely from Grand Junction, Colorado or other scenic locations will likely be limited to older workers who don’t climb the corporate ladder, Nickelsburg said. And these teleworkers won’t get a raise because companies won’t have to compete for their services, he added.

Whether or not the business trip continues to be weak is another unknown. Over the years, a lot of infrastructure and jobs have grown around consultants and executives, who spend most of their week working on the road.

Where will the workforce live?

Sadly, living on the beach is considered a distant possibility Living in high-rise apartments in the city center can lose its beauty. There may be a migration to smaller cities near major metropolitan areas.

“We still don’t know,” Dhawan said.

Dhawan said he even thought of moving one day to live in a high-rise building. “No way after this pandemic.”

How big of a hit will the residential and commercial real estate sectors get?

Will robots take more work?

There has been an increase in technology adoption, but how it plays out is uncertain.

Perhaps more technologies will be adopted than before the pandemic. ”Said Nickelsburg.

Grocery stores, restaurants and hotels have been able to adopt labor-saving technology.

Which companies are Zombies?

“In America, many companies have accumulated debt as a result of trying to survive during a pandemic,” said Stephen Cecchetti, professor of economics at the Brandeis School of International Business. It is not yet known whether they will be able to repay that debt. Deciding which company to save, he noted, would be a difficult public policy decision.

“You don’t want to kill things that are viable businesses in the future,” said Cecchetti.

Companies that were once viable – if not for a pandemic – should be identified. But businesses like shopping malls and big box retailers won’t be of help, he said.

“Finding it is really difficult, and deciding what to do with it sounds very cold,” said Cecchetti.

Will Americans save more money in the event of future troubles?

Looking at the economy, Barry Eichengreen from the University of California Berkeley says he doesn’t start with inflation or interest rates but with things like precautionary savings. “I wondered if people would get hurt by the pandemic when they realized they couldn’t put food on the table and had to go to the food banks to save in case. That means weaker private spending and more room for government spending and hence fiscal stimulus in the pipeline will not lead to higher inflation or higher interest rates, ”he said. Recent data shows that consumers are returning to their deepest ways. Dhawan of Georgia says watch and jewelry sales are now running faster than before the pandemic,

What will happen to inflation in 2022?

The idea that inflation will rise above the Fed’s 2% target this year is no longer in dispute. Joseph Gagnon, a senior economist at the Peterson Institute for International Economics, says all eyes are on 2022. “It really matters next year,” he said. The Fed expects inflation to drop to 2% next year after hitting 2.4% this year. But Gagnon thinks the inflation rate could reach 3%.

Read: Larry Summers worries about inflation

Mark Gertler, professor of economics at New York University, says we’ve lived in a low-inflation world for too long and we’ve gotten used to it.

There could be a parallel to the 1970s. He said: At the time, low inflation could not be imagined. “Can we fall into the same smug trap,” he said.

“I’m not saying that will happen in the next year or two, but we can finally go back to an environment where it is a matter of bringing inflation down to its target level instead of increasing it,” he said. “.



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