The Great Pandemic Legacy:
A Stronger Global Economy

As the number of at-home workers escalated from about 5% of the total workforce to nearly half,¹ people have discovered that it’s a much more viable option than they expected, notes the report. That trend, along with Americans seeking new ways to entertain themselves at home, has driven a surge in online shopping and in the demand for consumer goods. Another potential legacy of the pandemic is higher labor productivity, according to the report. While half of all job losses had been recovered by September, a much larger share of output was recovered.²

A larger role for policy

Governments worldwide acted swiftly to bolster their economies in the early days of the crisis. The U.S. economy and financial markets have benefited from the Federal Reserve’s low interest rates and other pro-growth strategies, while direct relief to families through the Coronavirus Aid, Relief and Economic Security (CARES) Act was so massive that for the first time ever household income rose rather than fell in a recession, notes the CIO. This explains why retail sales set new records in the third quarter, despite still-high unemployment. Such successes demonstrate the government’s ability to support the economy, especially during crises that force widespread shutdowns. In the short term, they could pave the way for additional rounds of stimulus as the pandemic wears on.

A shifting geopolitical stage

Global opinion on China has soured amid the country’s lack of transparency about the origins of the coronavirus, and its early response to the crisis. U.S.-China relations, already tense, have worsened considerably. This new cold war is playing out most intensely in the battle for new technologies, believes the CIO. Additionally, the U.S. and many European and Asian countries are actively seeking to move production of products closer to home to help protect against future disruptions. Both trends could help support growth in U.S. technology and other innovative industries.

What investors should consider

“Taken together, the changes wrought by the pandemic suggest a greater long-term commitment to U.S. stocks,” says Hyzy. While the pandemic’s still-uncertain future, geopolitical tensions and other challenges will likely cause ongoing periods of volatility, “We believe we are in the early stages of a new, long-term bull market featuring industry growth, stronger capital investment and rising productivity.”

For more on how the pandemic has changed the U.S. and global economic outlook for the future, read “The Great Pandemic Legacy.”