The sudden economic lockdown of March 2020 was a global shock. Our team of experts have Identified some valuable insights for economic recovery post pandemic. Historically, the main economic challenge has been providing for people’s needs sustainably despite natural scarcities. Wealth creation has been the goal, achieved through trade, investment, and innovation.
However, these considerations were set aside to combat a perceived deadly disease. Initially intended to last two weeks, the lockdowns extended indefinitely, aiming to wait for a vaccine based on the assumption that the entire population was at risk.
The global economy crashed by design, an unprecedented event in modern times. As Trump noted, such an action was unprecedented and dangerous. The notion of turning the global economy off and then back on like a breaker switch is unrealistic.
Ten Key Insights on Economic Recovery Post-Pandemic
Labor Markets Have Not Recovered
Labor participation and employment/population ratios remain below 2019 levels, possibly due to retirement, disability, or demoralization. The job market has not returned to pre-lockdown trends. This has significant implications for economic recovery post-pandemic, as a robust labor market is essential for sustainable growth. (U.S. Bureau of Labor Statistics)
Inflation Erased Stimulus Benefits
The initial stimulus seemed beneficial, but rampant inflation quickly eroded purchasing power. Massive money creation led to significant inflation, effectively taxing away the stimulus benefits. This highlights the complex balance between stimulating the economy and maintaining purchasing power.
Retail and Factory Orders Are Misleading
Retail sales and factory orders appear up only because of inflation. When adjusted, these figures show no real increase, indicating ongoing economic weakness. The recovery is not as robust as it seems, masked by inflated numbers.
Output Has Not Increased
Despite claims of a quick recovery, true economic output has not returned to pre-lockdown levels, partly due to the inclusion of government spending in economic growth statistics. The actual productive capacity of the economy remains below its potential.
Inflation Data Is Misleading
Official inflation data underreports actual price increases, excluding factors like interest rates, taxes, and shrinkflation. Real inflation may be significantly higher than reported, which can distort economic planning and public perception.
New Trade Blocs Have Formed
Global supply chains have frayed, leading to new trade blocs and diminishing the benefits of global economic integration. This shift in trade dynamics presents both challenges and opportunities for economic recovery post-pandemic.
Property Rights Are Insecure
Small businesses were shut down with unprecedented force, undermining property rights and discouraging new business formation. This has long-term implications for entrepreneurship and economic dynamism.
Debt Levels Are Out of Control
Government, corporate, and personal debt have skyrocketed, with rising interest rates adding further strain. High debt levels can hamper economic recovery post-pandemic by limiting future fiscal and monetary policy options.
CBDCs Are Part of a Control Agenda
Efforts to implement universal vaccine passports revealed a broader agenda of control, which may continue through Central Bank Digital Currencies (CBDCs). This raises concerns about privacy and economic freedom.
Financial Markets Are Unstable
While financial markets have thrived, they do not reflect the real economy’s struggles. The stock market’s performance benefits investors but does not help Main Street workers. This disconnect highlights the uneven nature of economic recovery post-pandemic.
The lockdowns created an unprecedented economic disruption, leaving the world less free and prosperous, with hopes of returning to normalcy dimmed. Official institutions continue to produce misleading data to mask the true impact. The road to economic recovery post-pandemic is fraught with challenges, but understanding these ten key insights can help navigate the complexities ahead.
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